ESA (European Space Agency) faces the threat of having no way to get its cargo and astronauts to the international space station (ISS) because NASA has decided to cut off the U.S. space shuttle early - in 2010 - five years before a new generation of space craft take over the transport duties.

A planned temporary arrangement for Europeans and Americans to use Russia’s Soyuz shuttles in the interim now seems in jeopardy because of tensions in the wake of Russian actions in Georgia.

NASA and ESA had collaborated on designing a station crew-return vehicle based on an earlier experimental craft, the X-38, but the project has been dropped on the U.S. side even though the European parts were being delivered.

As reported by the BBC, ESA was caught short by NASA’s action. “The decision to cancel the order was delivered by the U.S. government after the components were ready, according to Mario Caporicci, head of ESA’s future space transport infrastructure division, the BBC said on September 12, 2008.

Already, there were question marks about the continuing U.S. role in the ISS after the current shuttle program is discontinued in 2010. The U.S. “constellation” space program has slowed its development pace because of technical and funding problems, and the NASA announcement left a 5-year gap (at least) of no U.S. transportation to and from the station.

An embarrassing aspect of this decision is that the U.S. had promised transportation services to its European, Japanese, and Canadian partners, who all provided their own laboratory materials and equipment to the station.

So what can the grounded Europeans do? A proposal is currently underway to evolve their existing cargo vessel (ATV) into having the capability to transport astronauts, which is considered a necessary second step by Mr. Caporicci and ESA. “To achieve this second step, it will be necessary to analyze in detail the implications of adapting the Arianne 5 launcher and its ground segment to human spaceflight,” Caporicci said.

The longstanding alternative had involved leasing Russian space-craft to ferry freight and people, but that appears unacceptable in Washington under the current circumstances. “The Russians are not going to back out of Georgia anytime soon, certainly not prior to the U.S. presidential election,” NASA chief Michael Griffin told the BBC.

In practice, he predicted, the next U.S. administration will have no choice but to extend the life of the U.S. shuttle. So Europeans will have to wait until the November election and January inauguration before having a clue about the fate of the international program centered on the space station.

In textbooks, globalization may have its good sides and less-good sides, but there are no redeeming features to the dark side of globalization - organized crime with global reach.

To get a ripe taste of this dark underbelly of globalization and its spread in Europe, dip into the latest book by Misha Glenny, a journalist who gained international attention with his reporting on the horrors of wars and bloodshed in the collapse of the former Yugoslavia. In McMafia: A Journey Through the Global Criminal Underworld, Glenny makes the case, all too convincingly, that Eastern Europe, with its new and fragile democratic systems, has become the gateway for criminal syndicates that match the best multinationals in their professional skills in exploiting the new potential for illicit goods and services to pass borders with the freedom enjoyed by normal trade.

According to Glenny, the “global shadow economy” now accounts for 15-20% of the world’s economic transactions and its epicenter resides in new EU states where governments are still trying to organize their defenses against the criminal spillover from the collapse of the Soviet empire.

Glenny’s book of reportage and analysis is reviewed by Michael Mosettig, a foreign affairs producer at the NewsHour with Jim Lehrer, in the forthcoming issue of European Affairs. He starts by admiring Glenny’s title - “McMafia” - as a way of evoking “[their] global reach as criminal ‘corporations’ aspire to penetrate markets the world over - mirroring the global goals of legal entities such as McDonald’s.”

In this global overview, Glenny implicates Europe in McMafia’s success because it provides the market for illegal labor, drugs and illicit goods. This traffic uses the Balkan states as a highway, but other Eastern and Central European states play their roles, too, as gateways for criminal activity to enter the EU. Glenny makes it clear that, so far, EU crime-fighting strategies have failed to curb McMafia’s activities. Just last week, Enlargement Commissioner Olli Rehn confirmed that the EU may freeze millions of euros in aid to Bulgaria because of its government’s inadequate efforts to fight the organized crime and corruption which has flooded the country.

Preview Mosettig’s review of McMafia on the European Institute’s website.

The debate over biofuels has heated up on both sides of the Atlantic in recent weeks, with the current prime biofuel - ethanol made from corn - now being blamed as a contributing factor to the dramatic rise in the price of food around the world.

Until recently, it was seen by many as a silver bullet for cutting dependence on oil, thus helping energy security and reducing greenhouse gas emissions. Not everyone agreed with the idea. In the winter 2006 issue of European Affairs, John Ritch, head of the World Nuclear Association, pointed out that it remains to be seen whether “biofuels” actually constitute a long-term contribution to a sustainable strategy for clean energy. In the climate crisis, a not insignificant factor is the shrinkage of “carbon sinks” as the world’s forests get converted to farm land. So the limited amount of farmland is a constraint. And “clearing woods to plant these crops actually heightens our vulnerability to amassing more greenhouse gases in the atmosphere,” he wrote two years ago.

Now, the impact in terms of displacing food crops to raise ethanol has emerged as another, more immediate drawback for biofuels. In the U.S., for example, Congress increased incentives for ethanol production designed to raise output from seven billion gallons a year to 36 billion by 2022, with 15 billion of that coming from corn. The remainder will be derived from “next generation” sources such as prairie grasses and wood chips, but it could be years before this advanced ethanol will be available on a commercial scale. This mandated, subsidized biofuel uses corn as its main foodstock and last year absorbed a quarter of the U.S. corn harvest. When combined with surging demand for corn abroad fueled in part by the cheap dollar, the effect has been to displace other crops, reducing their supply and raising prices for other foods from bread to beef that depend on wheat. By next year, as much as one-third of U.S. corn production is expected to go into ethanol.

Another source of consternation (and transatlantic frictions) are biodiesel-production subsidies in the European Union and in the United States. The U.S. government provides a $1 subsidy for every gallon of biodiesel that is blended in the U.S. for export. Europeans complain that this has given American producers an unfair advantage in EU markets, where “artificially cheap” American products are putting EU producers out of business. Many European nations and the EU also provide somewhat less generous subsidies to biofuel producers, but there has been pressure for them to eliminate such support. Some have said that a high demand for biofuels in Europe has made subsidies unnecessary.

This subsidy was intended to help the American biodiesel industry, but it seems that foreign companies have discovered a way to take advantage as well. Biofuel producers from Europe and elsewhere ship their biodiesel to the U.S., where they add a “splash” of regular diesel, qualifying their product for American subsidies. The fuel is then shipped back to Europe for sale, where it is also eligible for EU subsidies. This loophole, which has been a cause of public complaints since late last year, ironically results in even higher carbon emissions from the back-and-forth transatlantic shipments.

Another objection to biofuels among environmentalists is the high demand for water at big ethanol-production facilities. This has added to strains on the water table in Florida and other localities in the U.S. There are growing concerns, too, that ethanol was oversold as a product that would reduce greenhouse gases. Some new U.S. ethanol plants are powered by coal, and truck corn from hundreds of miles away, gobbling up fossil fuels. Acreage displaced for energy crops here may be replaced by plowing virgin lands in Africa and South America, causing major releases of carbon. And although corn ethanol plants that are built after next January 1 will have to show they are reducing carbon, most plants needed to meet the 15 billion gallon mandate will already have been built by then.

The new attention to ethanol’s downside has prompted statements in Congress about rolling back federal support for biofuel production in the face of rising food prices. House Majority Leader Steny Hoyer suggested on May 1 that he favored moves in this direction. At the urging of the livestock, poultry and hog industry, the governor of Texas and 28 Senators have asked the administrator of the Environmental Protection Agency to set aside ethanol requirements at least temporarily to help ease corn prices. The New York Times published an editorial on Sunday calling on Congress to roll back subsidies and rethink its support of ethanol. But the ethanol boom has brought windfall profits to farm states, so there are doubts about whether this policy can be changed fast, especially in an election year.

In the EU, fingers are being pointed at the U.S. on this issue. EU trade commissioner Peter Mandelson did so in an op-ed published in the Guardian (UK). “We can already see that large-scale biofuel production, especially in the U.S., may be one of the factors pushing up food prices,” he wrote. “The race to grow maize for ethanol subsidies in the U.S. reduces the supply of food crops on world markets and drives up the cost of this important staple.” (”Maize” is the grain that Americans call “corn.”) Despite the EU’s mandate that biofuels account for ten percent of transport fuel by 2020, Mandelson argued that European biofuel production is having “only a minimal effect” on food prices.

Amid these recriminations, there is talk in the EU of scrapping biofuel subsidy programs, Already, these is increased pressure on EU officials to lower or abandon the ten percent target, especially in Germany where at least one-tenth of the nation’s cars do not have engines adapted to run with a significant admixture of ethanol. In the UK, all petrol and diesel sold at pumps is now required to contain at least 2.5% biofuels. But Prime Minister Gordon Brown signaled a retreat from biofuels last month, acknowledging the global food crisis and saying that Britain must be “more selective” in its support for biofuels.

See Also:
Editorial: Rethinking Ethanol, New York Times, 11 May 2008
Nuclear Rising on Both Sides of the Atlantic, European Affairs, Winter 2006
U.S. Biodiesel Subsidies Anger Europeans, National Public Radio, 10 April 2008
Biofuels: EU plans to scrap ‘needless’ farmer aid, Business Report, 15 April 2008
Demands for crackdown on biofuels scam, The Guardian (UK), 1 April 2008
Biofuel Boondoggle: US Subsidy Aids Europe’s Drivers, Christian Science Monitor, 8 June 2007
Congress’ ethanol affair is cooling, Washington Times, 1 May 2008
Op-Ed: Keeping the Crop in Hand, The Guardian (UK), 29 April 2008
Pressure Grows on EU to Abandon Biofuels, Der Spiegel, 16 April 2008
Petrol must now include biofuels, BBC News, 15 April 2008
Brown’s biofuels caution welcomed, BBC News, 22 April 2008

Correction: This post was edited on May 13 to better reflect the different subsidies allocated for biodiesel and ethanol.

Airbus has followed up its whopping U.S. deal of in-flight refueling tankers with a second, slightly smaller sale of similar aircraft to Britain. The British deal, confirmed by EADS chief Louis Gallois in an interview with a French newspaper, will be worth approximately $26 billion (£13 billion) over 27 years. The RAF will take 14 of the tankers from AirTanker, a European consortium led by EADS, the defense subsidiary of Airbus, using the airframe of the A330 civilian airliner. Their date for entering service is 2011. The contract reportedly will create 600 new jobs and safeguard another 3,000 in Britain, where the wings are built for the Airbus airframe.

The UK sale marks the second big defeat for a major military sale in less than a month for EADS’s chief rival in the United States, Boeing. The U.S. contract, initially worth $35 billion, is being formally challenged by Boeing, which is confident of being able to mobilize strong support in Congress to make the Air Force re-examine the decision to award the contract to a European consortium. If there is an all-out showdown with the Pentagon, Congress could refuse to fund the program, making the Air Force modernize its existing fleet of Boeing-made tankers.

Boeing has filed an official complaint about flaws in the procurement process that it lost last month, and “it is a list of specifics that look too serious to just be brushed aside,” according to John Pike, who heads GlobalSecurity.org, an on-line service of strategic analysis based in Washington..

The complaint must be reviewed by the Government Accounting Office (GAO), so, Pike said, “it is too soon for EADS to start counting any chickens” in this deal.

Related Post:

Pentagon Contract a “Massive Breakthrough” for European Companies, 6 March 2008

See Also:
KC-X Boeing Protest, GlobalSecurity.org

EADS wins £13bn RAF tanker deal, BBC News, 27 March 2008

EADS: Unveiling $26 Billion Deal With United Kingdom, Stratfor Strategic Forecasting, 27 March 2008

Airbus parent EADS wins British tanker refueling deal, International Herald Tribune, 27 March 2008

Air tanker deal set to be sealed, Financial Times, 27 March 2008

As we noted here last week, the surprise selection of an EADS-Northrop Grumman joint bid for a $35 billion Defense contract last week has been the source of much consternation on Capitol Hill. Some lawmakers, outraged that the European conglomerate which owns Airbus was picked over U.S. aerospace giant Boeing, seem determined to keep the deal from going forward. Officials from the U.S. Air Force and Northrop Grumman scrambled to defend the contract this week amid allegations in Congress of “a European economic stimulus plan” and threats to withhold funding for the project.

From yesterday’s Politico:

Other critics argue that hiring the European-based EADS to provide military equipment raises national security questions.

Northrop Grumman, though, dismissed the national security concerns as a red herring, stressing the fact that the Los Angeles-based company is the prime contractor on the program.

“What we are doing is exactly what Boeing would do,” said Northrop Grumman spokesman Randy Belote. “There are no issues relative to any U.S. secrets, any transfer of technology out of the United States to Europe. It just doesn’t happen under our process.”

See the full story at Politico.com.

Today’s Politico has an extensive report on the Northrop/EADS team’s lobbying strategy as it fights Boeing’s formal protest of the award, filed Tuesday with the GAO.

Related Posts:
Pentagon Contract a “Massive Breakthrough” for European Companies, 6 March 2008

See Also:
Air Force slammed in Congress for Boeing contract, Politico, 12 March 2008
Defence contract was won fair and square, Op-ed, Sen. Richard Shelby (R-Ala.), Financial Times, 10 March 2008
Northrop rallies lobbying troops to save contract, Politico, 12 March 2008

European foreign ministries feel “preoccupation and anxiety” over the possibility that Russia is preparing to extend official recognition to Abkhazia, the breakaway province of Georgia, the European Commission’s top official for external relations, Benita Ferrero-Waldner said this week. Her comment was published Monday by the EU Observer, an on-line news service, as EU foreign ministers gathered for a meeting in Slovenia, which currently holds the EU’s rotating presidency.

Her sense of alarm echoed calls by Sweden and Poland for the EU to take a stronger stance in support of Georgia in the wake of Moscow’s action last Thursday in opening free trade with the territory. Commissioner Ferrero-Waldner stressed European support for Georgia and cited spreading alarm in Europe that “Russia may be paving the way for recognition of Abkhazia.” This territory on the Black Sea has set up its own government and is protected by Russian peacekeepers, but it has not been recognized by anyone.

Moscow, in improving ties with Abkhazia, seems to be intent on fulfilling its own dire warning that Western-backed independence for Kosovo last month could create a precedent for further “Balkanizing” splits in the Caucasus. Moscow has not cited Kosovo in its statements about Abkhazia, but Slovenia’s foreign minister, Dimitrij Rupel, who chaired the EU meeting, was quoted saying that “Russia and [the rest of] the Confederation of Independent States have decided to draw certain parallels with Kosovo.”

Officials in Georgia lashed out at Russia’s attitude. The speaker of the country’s parliament, Nino Burjanadze, called Russia’s recent actions “really bad news” for Georgia. He predicted that the Russians’ abandoning the international embargo on direct trade with Abkhazia “means that they are going, step by step, in the direction of the annexation of this territory.”

Related Posts:
Kosovo’s Independence Boosts Copycat Separatists in Georgia, 7 March 2008
Kosovo: A Real Geopolitical Precedent, 14 February 2008

See Also:
EU foreign ministers concerned Russia to recognize Abkhazia (EU Observer, 11 March 2008)

The surprise selection of a European corporation for a major U.S. military contract - to build $35 billion worth of in-flight refueling tankers - has sent shock waves through the world of defense contractors. There were strong reactions both in the U.S. and Europe as officials and executives grappled with the political implications of the choice of the EADS/Northrop Grumman consortium over Boeing, which had been heavily favored to replace the existing fleet of Boeing-built tankers with a new model. But Pentagon officials said the tanker model proposed by EADS with its junior U.S. partner clearly came out ahead in four of the five categories that were the basis for the contract. The common-sense assumption in Washington is that the Northrop/EADS offer must have been far superior for the Bush administration to risk alienating domestic interests in an election year by choosing an airplane perceived by many in Congress as being largely built by a “French” company. (more…)