Massenbach-Letter: NEWS 07/02/14

Massenbach-Letter

Udo von Massenbach

* Kerry /Munich Security Conference: “Leading does not mean meeting in Munich for good discussions.”*

Hagel Calls on NATO Allies to Strategically Invest Defense Funding*

Guten Morgen.

Massenbach* Al Qaeda disassociates from the Iraqi ISIS group

DEBKAfile February 3, 2014, 11:30 AM (IST)

In a message posted on jihadi websites Monday, Al Qaeda’s General Command said it had no link with the Islamic State in Iraq and Syria (ISIS) and is not responsible for its action, including clashes with Syrian rebel groups. "Al Qaeda announces that it does not link itself with that group. … It is not a branch of the al Qaeda group, does not have an organizational relationship with it and (al Qaeda) is not the group responsible for their actions,"

http://www.debka.com/newsupdate/7120/

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Policy= res publica

Freudenberg-Pilster* France to send big business delegation to Tehran

DEBKAfile February 3, 2014, 9:39 AM (IST)

More than 100 French companies, including Total energy, engineering Alstom, telecom Orange and carmaker Renault, are about to descend on Tehran in the biggest demonstration of Western business interest in the Islamic Republic for more than a decade. Among the Europeans waiting in line for the easing of sanctions are German and Dutch business groups. Representatives of American companies are also standing by.

http://www.debka.com/newsupdate/7117/

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Politics: From Vision to Action

Barandat* Augen Geradeaus: Entscheidung fällt im Räumgebiet

„Wenn von der Leyen, ebenfalls von amerikanischer Seite, für die Ankündigung eines stärkeren Bundeswehr-Engagements in Mali gelobt wird, mag das daran liegen, dass die internationalen Partner noch nicht so genau hingehört haben, was im Berliner Bendler-Block denn derzeit erwogen wird. Eine Erhöhung der derzeitigen – nicht ausgeschöpften – Mandatsobergrenze von 180 auf 250 Soldaten mag aus deutscher Sicht ein stärkeres Engagement sein, aus Sicht mancher anderer Nationen ist das eine Verstärkung der Truppenküche.“

Kommunikation, das ist auch ein unter Politikern bekannter Grundsatz, ist nicht, wie es gemeint ist – sondern wie es ankommt. Deshalb wird die konzertierte Aktion, die Debatte über eine aktivere Rolle Deutschlands in der Weltpolitik, nicht alleine davon abhängen, wie die Protagonisten sich ihre Vorstöße gedacht haben. Ob Bundespräsident Joachim Gauck, Verteidigungsministerin Ursula von der Leyen oder Außenminister Frank-Walter Steinmeier: Was sie dazu auf der Münchner Sicherheitskonferenz gesagt haben, wird Wünsche bei Verbündeten und Freunden wecken. Auch wenn die drei Exponenten der deutschen Politik das so nicht beabsichtigten.

Der Außenminister, der die Aussagen zu dem Thema abgerundet hatte, hatte zwar eine deutsche Kultur der militärischen Zurückhaltung quasi als Selbstverständlichkeit in seiner Rede hervorgehoben. Seine Ergänzung, eine so politisch wie wirtschaftlich starke Nation könne Außenpolitik nicht nur von der Seitenlinie kommentieren, mag als Selbstverpflichtung zu einem stärkeren politischen und diplomatischen Engagement gemeint sein. Doch mehr außenpolitisches Engagement steht – und stand schon immer – weitgehend im Belieben der jeweiligen Bundesregierung; für zu viel Diplomatie in einer Krise hat sich noch kein Minister rechtfertigen müssen.

Die Partner hören deshalb, auch wenn das dem deutschen Außenminister nicht passen mag, aus solchen Äußerungen gerne die Bereitschaft zu mehr militärischem Engagement heraus. Führung bedeutet nicht nur, gute Diskussionen in München zu haben. Es heißt auch, die entsprechenden Ressourcen zur Verfügung zu stellen, sagte US-Außenminister John Kerry auf dem Münchner Podium. Im Klartext: Mehr politische Anstrengungen gerne, aber, liebe Deutschen, seid auch dazu bereit, Soldaten zu schicken, falls es nötig ist.

Das mag so direkt auch bei der Verteidigungsministerin noch nicht angekommen sein. Wenn von der Leyen, ebenfalls von amerikanischer Seite, für die Ankündigung eines stärkeren Bundeswehr-Engagements in Mali gelobt wird, mag das daran liegen, dass die internationalen Partner noch nicht so genau hingehört haben, was im Berliner Bendler-Block denn derzeit erwogen wird. Eine Erhöhung der derzeitigen – nicht ausgeschöpften – Mandatsobergrenze von 180 auf 250 Soldaten mag aus deutscher Sicht ein stärkeres Engagement sein, aus Sicht mancher anderer Nationen ist das eine Verstärkung der Truppenküche.

Beide Minister, so ist in München am Rande der Konferenz zu hören, wollen sorgfältig den Eindruck vermeiden, mehr deutsches Engagement bedeute gleich den großen militärischen Interventionsschritt. Andersrum wird ein Schuh draus: Ob die Bekenntnisse, die in München abgelegt wurden, nicht gerade am Ende auf mehr deutsche Soldaten in aller Welt hinauslaufen müssen, soll erst mal kein Thema sein. Sondern irgendwann einmal. Mit den Worten der Minensucher: Entscheidung fällt im Räumgebiet. Da, wo die Minen liegen.

Nachtrag: Hier ein Beispiel für die internationale Rezeption: Germany signals new self-confidence on military operations

(Foto: UN-Generalsekretär Ban Ki-Moon und Steinmeier auf der Sicherheitskonferenz – MSC/Kleinschmidt)

http://augengeradeaus.net/2014/02/entscheidung-fallt-im-raumgebiet/

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Hagel Calls on NATO Allies to Strategically Invest Defense Funding

MUNICH — US Defense Secretary Chuck Hagel called on European allies to invest more strategically in military projects, particularly as NATO’s mission in Afghanistan comes to an end and many nations reduce defense spending.

Speaking at the Munich Security Conference, formerly called Wehrkunde, Hagel said the US military is looking for allies to pick up missions as the Pentagon downsizes after more than 12 years at war.

“We’re developing strategies to address global threats as we build more joint capacity with European militaries,” Hagel said Saturday.

“In the face of budget constraints here on the continent, as well as in the United States, we must all invest more strategically to protect military capability and readiness,” he said. “The question is not just how much we spend, but how we spend together.”

One way the Defense Department plans to outline its future plans is through the Quadrennial Defense Review (QDR), a document that sets military priorities and strategy. Hagel gave some insight into the QDR, which will be released in the coming months.

The US defense secretary said the strategy document would place an emphasis on working with allies. These allies — who have increased their own expertise through more than a decade of war — could play a valuable role in training and assisting less-capable militaries.

“There are some capabilities that the United States military will continue to invest heavily in,” a senior defense official said. “His expectation is that we will continue to be the world leader in those kinds of capabilities.”

Among those capabilities are the nuclear and missile defense missions, the senior official said.

“Despite fiscal constraints, the budget that we will release next month fully protects our investment in European missile defense,” Hagel said in his speech.

The US is implementing a multiphased missile defense plan in Europe that includes the installation of interceptors in Poland. Missile defense was one of the most discussed items when Hagel visited Poland earlier this week.

Hagel said US partnerships with the UK and Australian militaries could offer “a model for closer integration with other allies and partners — including NATO as a whole — and will influence US strategic planning and future investments.”

The US is helping the UK regenerate its aircraft carrier capability and an Australian is deputy commanding general of US Army forces in the Pacific.

“The Department of Defense will work closely with our allies’ different and individual strengths and capabilities, from the training of indigenous forces to more advanced combat missions,” Hagel said.

In his 11 months as defense secretary, Hagel said he has worked closely with his former senate colleague, Secretary of State John Kerry, to restore “balance to the relationship between American defense and diplomacy.”

After a more than a decade on a “war footing,” Hagel believes “the nation’s foreign policy should and rightly be led by the State Department with the Defense Department in full support,” the senior defense official said.

“The secretary firmly believes in that concept, that foreign policy had become too militarized over the last decade or so and that it’s time for us to be a supporting role when it comes to the execution of this country’s foreign policy,” the official said.

Hagel’s speech took a far different tone than former Defense Secretary Robert Gates took in 2011 when he sharply criticized European allies for not adequately funding their own defense programs. Hagel said his comments were similar to Gates, just delivered differently.

“Partnerships mean partnership,” Hagel said afterward during a question-and-answer session. “Everybody has to participate, everyone has to contribute, everybody has a role to play.”

Kerry, in his address to the conference, said, “turning inward is not an option” and allies should contribute to assistance programs.

“Leading does not mean meeting in Munich for good discussions,” Kerry said. “It means committing resources, even in a difficult time, to make certain that we are helping countries to fight back against the complex, vexing challenges of our day.”

Hagel in his speech also noted that China and Russia “are rapidly modernizing their militaries and global defense industries, challenging our technological edge and defense partnerships around the world.”

The comments were similar to ones made by Pentagon acquisition chief Frank Kendall, who has recently said he was concerned that spending cuts in research-and-development could erode the US military’s technological superiority.

http://www.defensenews.com/article/20140201/DEFREG01/302010024/1001/DEFSECT

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First US BMD ship leaves for Rota

3 More destroyers to follow

WASHINGTON — The US destroyer Donald Cook shoved off from Norfolk, Va., Jan. 31, bound for Rota, Spain, where the Arleigh Burke-class ship will become the first of four ballistic missile defense (BMD)-capable ships to be based in Europe.

The move, in the works since the fall of 2011, is part of the Obama administration’s Phased Adaptive Approach (PAA) plan to protect allies in the European region from ballistic missile threats, including missiles that could be launched from Iran. The plan includes forward-basing the Aegis destroyers in Spain, and establishing two Aegis Ashore ground stations — one in Romania to be operational by 2015, and another in Poland, to be up and running in 2018.

US Defense Secretary Chuck Hagel, visiting Poland Jan. 30, highlighted the two countries’ BMD efforts.

“Our nations continue to work closely together, both bilaterally and through NATO, in response to ballistic missile threats,” Hagel said. “And the United States is firmly committed to deploying a US missile defense system to Poland. We look forward to this system coming online in 2018 as part of Phase 3 of the European Phased Adaptive Approach.”

The destroyers in Spain will officially be referred to as “forward deployed naval forces” (FDNF), something of a euphemism for basing ships outside the US. The FDNF term is widely associated with US ships based in Japan, as well as ships in Bahrain and elsewhere.

The FDNF construct allows the Navy to provide more forward-based presence with fewer ships. Transit time from the US to the operating area is eliminated, and the ships are able to respond quickly to a wide range of contingencies.

“Permanently forward-deploying four ships in Rota will enable us to be in the right place, not just at the right time, but all the time,” Navy Secretary Ray Mabus said of the move.

Operational BMD forces were first deployed to the western Pacific, where the threat from North Korea has garnered the most attention. Beginning in 2009, the US adopted the PAA as a structure for establishing regional missile defense, with the European plan known as EPAA. The construct also is in use in the Asia-Pacific region, and is to be implemented in the Middle East.

Aegis BMD ships have been carrying out Mediterranean patrols with the US 6th Fleet since 2011.

The movement of the four destroyers to Rota, along with the establishment of a ground-based radar, is Phase 1 of the EPAA. Phase 2 is the Aegis Ashore installation in Romania, armed with Standard SM-3 IB interceptor missiles, and Phase 3 is the Polish Aegis Ashore installation, armed with SM-3 IIA missiles. A planned Phase 4 involving SM-3 IIB missiles was canceled by the US in March 2013.

Donald Cook will be joined in a few months in Rota by the destroyer Ross, while Carney and Porter will follow in 2015. All but the Mayport, Fla.-based Carney were homeported in Norfolk.

According to the Congressional Research Service, the Navy estimates 1,239 military personnel — 1,204 crewmembers and 35 shore-based support personnel — will move to Rota as part of the EPAA, along with about 2,100 family members. Moving the four ships and their dependents to Rota will cost about $92 million, with another $100 million being spent annually on supporting the ships in Spain.

The Navy has also established a new regional maintenance center detachment in Rota to oversee industrial engineering and contractor services to maintain and modernize the four destroyers.

When all four ships have transferred to Spain, the normal pattern will see two ships in port and two on patrol. The Navy emphasized that the ships not only will be tasked with BMD duties, but will also “perform a myriad of tasks, NATO missile defense, the full spectrum of maritime security operations, bilateral and multilateral training exercises, and NATO operations and deployments.”

A major base for the Spanish Navy, Rota is a familiar port of call for US ships deploying to and through the Mediterranean. From its location on Spain’s southwest Atlantic coast, it’s about 65 miles southeast to the Strait of Gibraltar, the gateway to the Med.

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Suter* Some children stabilize marriage, others don’t

Posted on February 3, 2014 by IZA Press

From an economic perspective, children can be seen as an investment of the parents to increase the value of the marriage. In turn, children make a divorce more costly. A new IZA discussion paper by Héctor Bellido, José Alberto Molina, Anne Solaz and Elena G. F. Stancanelli tests this theoretical argument on U.S. data. The authors confirm that children can have a stabilizing effect, but this is not always the case. The results indicate that children conceived during marriage significantly reduce the probability of marital disruption. The authors show: the younger the children, the greater the deterrent effect, and the higher the parents’ level of education, the larger the positive effect of fertility on marital stability. In contrast, children conceived before marriage are found to increase the risk of marital disruption.

Read abstract or download discussion paper.

http://newsroom.iza.org/en/2014/02/03/2037/

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Middle East

Oil Industry Starts to Squeeze Costs, Wages

LONDON, Jan 30 (Reuters) – Cutting the cost of everything from salaries and steel pipes to seismic surveys and drilling equipment is the central challenge for the oil and gas industry over the next five years. The tremendous increase in exploration and production activity around the world over the last ten years has strained the global supply chain and been accompanied by a predictable increase in operating and capital costs.

When oil and gas prices were rising strongly, petroleum producers and their contractors could afford to absorb cost increases.

But as oil and gas production have moved back into line with demand, and prices have stabilised, the focus is switching once again to cost control. "Operational excellence," a euphemism for doing more with less, is back in fashion and set to dominate industry thinking for the rest of the decade.

Spending Discipline

Paal Kibsgaard, chief executive of Schlumberger, one of the largest service companies, has been emphasising "smart fracking" and other ways to raise output and cut costs for two years.

Speaking as long ago as March 2012, Kibsgaard warned: "In the past ten years, exploration and production spend has grown fourfold in nominal terms, while oil production is up only 11 percent." "In this environment, we believe our customers will favour working with companies that can help them increase production and recovery, reduce costs, and manage risks," he added.

Schlumberger’s website and those of its main competitors Halliburton and Baker Hughes all prominently feature technologies and processes intended to cut costs, such as dual-fuel diesel-natural gas drilling and pumping engines. It is just a small example of profound industry shift from an emphasis on increasing production to controlling spending.

Issuing a shocking profit warning on January 17, Royal Dutch Shell ’s new chief executive pledged to focus on "achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery." On Thursday, the company cut its capital budget for 2014, and announced it was suspending its controversial and expensive Arctic drilling programme.

Shell is catching up with peers like BP and Chevron , as well as perennially tight-fisted Exxon, in promising to stick to a tighter spending regime and return more value to shareholders . The problem is not unique to oil and gas producers. Miners like BHP Billiton, Rio Tinto and Anglo American have all axed projects and pledged to tighten capital discipline after costs spiralled out of control.

Megaproject Madness

The worst over-runs have been on so-called megaprojects – investments costing over $1 billion, sometimes much more. In fact, the bigger project, the worse the cost overruns and delays have tended to be. Pearl, Shell’s enormous gas to liquids project in Qatar, is now regarded as a success, but was seriously delayed and went wildly over-budget.

Other megaprojects like Chevron’s Gorgon LNG in Australia and the Caspian oil field Kashagan – which is being developed by an industry consortium including ENI, Shell, Total, Exxon and Conoco – have been similarly late and bust their original cost estimates. It is convenient, but wrong, to blame poor project management for all the days and cost overruns. Some decisions have been flawed, but on projects of this size and complexity, at least some errors are to be expected. Megaproject managers in 2013 were not, on the whole, worse than in 2003. Unfortunately, the economic and financial environment has become much less forgiving. When projects start to go wrong it has proved much harder to limit the delays and damage to the budget. By their nature, megaprojects are so big they strain the global construction and engineering supply chain and pool of skilled labour.

Megaprojects create their own adverse "weather," pushing up the cost of specialist labour and materials worldwide. Attempting to complete even one or two megaprojects with similar characteristics at the same time can strain the global supply chain to the limit. Attempting to complete several simultaneously is a recipe for severe cost escalation and delays. The multi-commodity boom over the last decade created a "perfect storm" for the megaproject industry. While there is not an exact overlap, massive offshore oil fields like Kashagan, LNG facilities like Gorgon, floating LNG platforms like Prelude (destined for Australia), gas to liquids plants and even simple onshore shale plays like North Dakota’s Bakken, are all competing for the same limited pool of skilled engineers, construction workers and speciality steels. The result has been a staggering increase in costs and wages. And once a project falls behind, there is no slack in the system to hire extra workers or procure additional or replacement components to get it back on track.

Supply Chain Responds

Rampant inflation and delays have been worst on megaprojects because they require a much higher proportion of very specialist components and the supply chain is least-elastic. But even simpler projects like shale oil and gas have been plagued by a rapid rise in costs as they stretch the availability of drillers, rigs and pressure pumping equipment, as well as fracking sand, fresh water and guar gum.

Between the end of 2003 and the end of 2013, the number of employees engaged in oil and gas extraction in the United States increased by 70 percent, from 117,000 to 201,000, according to the U.S. Bureau of Labor Statistics. Soaring demand for specialised workers has produced an entirely predictable surge in wages. Employees in North Dakota’s oil, gas and pipeline sectors were taking home an average monthly salary of $9,000 in the fourth quarter of 2012, and staff at support firms were making an average of more than $8,000, according to the latest data from the U.S. Census Bureau. Their colleagues in Texas were doing even better: average salaries in the oil and gas extraction industry were over $15,000 per month, and $11,000 in pipeline transportation. That made them some of the best-paid employees in the United States. Only financial services employees in New York ($28,000), Connecticut ($25,000), California ($17,000) and a few other states were routinely making more. Rising wages and other prices were the only means to ration scarce workers and raw materials. But they were also the only way to attract more workers and supplies into the industry.

Extreme Cycles

It takes a long time to train new drillers, petroleum engineers and construction specialists, and give them the experience needed before they can assume positions as experts and team leaders. Similarly, the expansion of specialist construction facilities and manufacturing firms for items like oil country tubular goods takes years; and companies will only expand or enter the industry if they are convinced the upturn in demand will be durable rather than fleeting. While the boom in oil and gas prices dates from around 2003 or 2004, the big expansion of exploration and production spending started much later, around 2006 or even 2007, and it has only filtered down to the labour pool and the rest of the supply chain much more slowly.

It is the long delay between an increase in demand for oil and gas, an increase in production and exploration activity, and an expansion of the whole supply chain, which explain the deep cyclicality of the petroleum industry and mining. Extreme cyclicality is hard-wired into oil, gas and mining markets. Companies like Shell which have tried to ride through the cycle by ignoring short-term price and cost changes to focus on the long term have eventually been compelled by their investors to fall into line. In the next stage of the cycle, oil and gas prices are set to remain relatively high but are unlikely to rise much further. For exploration and production companies, increasing shareholder value therefore means increasing efficiency and bearing down on costs, including compensation and payments to suppliers and contractors.

For the supply chain and oil-industry workers, capacity and the availability of skilled labour will continue to expand, while demand is set to stabilise or taper off. Major oil companies and miners have already cancelled some projects. Costs, wages and employment will fall, or at least start rising much more slowly. –

http://www.rigzone.com/news/oil_gas/a/131349/Kemp_Oil_Industry_Starts_to_Squeeze_Costs_Wages/?all=HG2

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*Massenbach’s

Recommendation*

Who is Europe’s “lost generation”?
An anatomy of (un)employment demographics in Europe

Even though unemployment in the euro area finally seems to have peaked, the employment crisis remains one of the main political and economic challenges in Europe. Even under optimistic growth scenarios it will take many years to achieve a substantial reduction in the number of unemployed.

The burden of the crisis is shared very unequally across generations and the euro area periphery faces an often termed “lost generation” which encounters unusually adverse labour market conditions. Especially youth unemployment rates of more than 50% in Greece and Spain, and around 40% in Italy and Portugal, will remain one of the main concerns.

Unlike the simplistic emphasis on youth unemployment suggests, there is a disproportionate incidence of adverse employment effects also for young cohorts of the prime labour market age. Most countries in the euro area periphery also registered a particularly large drop in employment rates for those between 25 and 34. For the members of this group it is generally more difficult and less useful than for the under-25s to avoid extended periods of unemployment by remaining longer in education or pursuing additional training.

A related development is the steeply rising incidents of long-term unemployment among younger cohorts. While the share of those who are unemployed for more than 12 months is higher among more mature workers, it has been rising steeply for younger cohorts. In the age group between 25 and 29 years, already between 40 and 60% in the euro area periphery are unemployed for more than one year.

Most countries suffering from high unemployment have started to take serious measures to facilitate job creation and the transition from education to work. A further reduction of the still existing labour market duality, investments in the employability of school leavers and incentives for companies to contribute to the skill formation of inexperienced workers, appear warranted. It is also important to design effective activation policies, which are not only aimed at the under-25s, but also include younger cohorts in the prime labour market age. (continued)

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Productivity Hacks: Is Your Organization in a Fighter’s Stance?

http://www.linkedin.com/today/post/article/20140121000414-86145090-productivity-hacks-is-your-organization-in-a-fighter-s-stance?trk=eml-ced-b-art-M-0&ut=2mD7I8xwRhDS41

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see our letter on:

Wir wünschen Ihnen ein angenehmes Wochenende. Ihr Team.

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Udo von Massenbach – Bärbel Freudenberg-Pilster – Jörg Barandat – Edith Suter

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