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Posted on Sustainabilitank.info on September 6th, 2008
by Pincas Jawetz (pj@sustainabilitank.info)

Chinese company wants to buy Brussels Airlines and its Airport.
VALENTINA POP, September 5, 2008.

Chinese airline Hainan may challenge a bid by Lufthansa to buy Brussels Airlines, with the Asian firm already in talks to snap up Belgium’s Charleroi airport.

German carrier Lufthansa remains the favourite bidder for Brussels Airlines, but some shareholders in the Belgian company believe the offer is too low and are looking at other partners, such as British Airways and Hainan, Sueddeutsche Zeitung reported on Friday (5 September).

Late last week, Lufthansa said it was in “constructive negotiations” to acquire a 45 percent stake in Brussels Airlines for €65 million, expecting to close the deal within the next few weeks. The remaining stake was then to be taken over after two years.

But shareholders in Brussels Airlines believe the carrier is worth at least €200 million. Brussels Airlines is the heir to the bankrupt Sabena, with a 30 percent share having been taken over in 2006 by Richard Branson’s Virgin Express.

Hainan’s interest in Brussels Airlines is fortified by its bid for Charleroi airport, a low-cost hub 46 km south of the Belgian capital.

Hainan is among the three companies shortlisted to buy up the currently publicly owned Charleroi airport, with the Chinese company saying it is one of their priorities and promising further developments of the low cost terminal, La Libre Belgique reported on Tuesday.

The move has sparked internal competition between Charleroi and the main Brussels airport, Zaventem, out of which Hainan operates a number of flights. Unidentified sources close to the deal told the Belgian newspaper that the managers of Zaventem had launched a “sabotage and denigration campaign” of Charleroi airport, in order to distract the Chinese.

La Libre Belgique also reported that the Flemish region and the Brussels Airport Company (BAC) who manages Zaventem gave Hainan Airlines financial advantages worth €1.5 million.

The newspaper draws a comparison with the aid offered by the Charleroi airport and the Walloon region to the Irish carrier Ryanair, aid deemed illegal by the European Commission in 2004.

After having read the newspaper report, the Walloon minister for transportation, Andre Antoine, said: “Nobody is stupid. The aim of the manoeuvre is to attract the Chinese to Zaventem, not Charleroi.”

Zaventem is Brussel’s main international airport.

In return, BAC said it didn’t understand the minister’s reaction and didn’t see any problems with the €1.5 million contract it signed two years ago with the Chinese company, in order to promote the Flemish region in Shanghai and Beijing. The contract does not involve directly neither BAC, nor Hainan Airlines, a press spokesman for BAC said.

La Libre Belgique reported that the contract involved some €400,000 being payed to Hainan for “marketing support” and €200,000 for language training for the pilots of the company. Only €900,000 were allocated to promoting the region in China, the newspaper says.

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[Comment / Opinion on EUobserver] After Georgia: is Ukraine next?
ANDREW WILSON, a senior policy fellow at the European Council on Foreign Relations, September 5, 2008.

EUOBSERVER / COMMENT – The war in Georgia began by exposing the security vacuum in the surrounding region. Now it has claimed its first collateral victim, after the fall of the Ukrainian government on 2 September.

The crisis has been brewing over the summer recess, but came to a head in late August after President Yushchenko’s administration accused Prime Minister Tymoshenko of trading her relative silence over Georgia for Russian support in a campaign to supplant him as president.

Ukraine president Viktor Yushchenko – the 2004 Orange Revolution feels a long time ago (Photo: timoshenko.com.ua)

When parliament reassembled, Tymoshenko joined forces with the east Ukrainian-based Party of Regions, ramming through a law to reduce presidential power, and apparently repositioning herself as a more pro-Russian candidate in the presidential race.

Parliament was also unable to agree any of several diametrically opposed resolutions on Georgia, ranging from outright condemnation of Russia to recognition of Abkhazia and South Ossetia.

The crisis comes in between the emergency EU summit on Russia-Georgia in Brussels on 1 September and the regular EU-Ukraine summit on 9 September in Evian, France.

The EU therefore has an ideal opportunity to push back against Russia’s attempts to dominate the European neighbourhood by starting with Ukraine, which is also the linchpin for the whole region.

***

War of words:

Many Ukrainians now hear domestic echoes of the lead-up to war in Georgia. Ukraine has its own potentially separatist region in Crimea, and the country’s Russian minority numbers some 8.3 million (the largest minority in Europe).

Half of Ukraine’s population of just over 46 million are Russian-speaking in various degrees. Although the Ukrainian constitution bans dual citizenship, the government has launched an inquiry into alleged covert Russian passport-holding in the Crimean city of Sevastopol.

Some Ukrainians note that Russia justified its invasion of Georgia, as the Nazis once justified their dismemberment of Czechoslovakia, as being necessary to “protect” a minority to whom they had just given citizenship.

Russia has begun a war of words over Ukraine’s alleged supply of arms to Georgia. And the conflict itself has shown that the Russian Black Sea Fleet, based in Sevastopol, can operate with impunity, whether Ukraine likes it or not.

Based on its analysis of Ukraine’s “Orange Revolution” as a foreign-backed “NGO coup,” Russia has also been quietly building its own network of Russia-friendly NGOs in Ukraine since 2004.

Ukrainians also talk of an otkat ekonomiya (“kickback economy”), in which Russian money percolates throughout the Ukrainian elite.

***

A strategy for Ukraine:

What should the EU therefore offer in Evian? The European Neighborhood Policy is a worthy enough technical process, but it does not address pressing political concerns about maintaining and securing Ukraine’s independence.

Many member states will worry about leaping straight to the contentious issue of ultimate membership for Ukraine, but the EU already recognizes Ukraine’s theoretical right to join once it has met the Copenhagen criteria; and it cannot be beyond EU leaders’ verbal dexterity to play up the prospect.

What Ukraine would value and needs most is a real sense that it is being treated distinctly in its own right. The key words are “association” and “partnership,” in whatever order or combination.

The EU has greater scope for short-term measures, which should be designed to deliver a multi-dimensional solidarity strategy for Ukraine.

The EU’s foreign ministers should invite their Ukrainian counterpart to give a briefing on Ukraine-Russia relations at their next meeting.

Ukraine should be offered a road map for visa-free travel, as well as ensuring that member states deliver on current visa facilitation measures. The new EU-Ukraine agreement should include a beefed-up solidarity clause, building on the 1994 Budapest Memorandum, whereby the EU would consult and assist Ukraine in case of challenges to its territorial integrity and sovereignty. And the EU should back Ukraine if it insists that the Russian Black Sea Fleet leaves on schedule in 2017.

The EU should also launch a comprehensive study of all aspects of Europe’s reliance on Russian energy supplies, including transit, energy security and conservation, supply diversification, and the impact of “bypass” pipelines like Nordstream and South Stream.

It should consider linking the opening of the Nordstream pipeline, which would allow Russia to cut off gas to Poland and Ukraine while maintaining deliveries to Germany, to the opening of the proposed “White Stream” pipeline to bring gas from Azerbaijan directly to Ukraine via Georgia, bypassing Russia.

The EU could even play a part in keeping the 2012 European Championship football finals on track. The decision to appoint Ukraine and Poland as co-hosts was a powerful symbol of European unity across the current EU border (Poland is a member, Ukraine is not).

UEFA is unhappy with Ukraine’s progress in building the necessary infrastructure, but Ukraine should be given time to get its act together.

Where appropriate, the EU should extend these measures to Moldova, which is now calling Ukraine a “strategic shelter,” most probably after the elections in March 2009.

Ukraine faces a crucial presidential election in 2009 or 2010. After getting its fingers badly burned at the last election in 2004, Russia is clearly tempted to intervene again. The “Russian factor” will strongly influence the campaign.

Greater Western engagement is needed to ensure that the “Europe factor” is equally prominent.

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