Внеаудиторное чтение по английскому языку. Учебное пособие

Goodbye to all that

Is the euro really worth saving? Even the single currency’s diehard backers now acknowledge that it was put together badly and run worse. Greece should never have been let in. France and Germany rode a coach and horses through the rules designed to prevent government borrowing getting out of hand. The high priests of euro-orthodoxy failed to grasp that, though Ireland and Spain kept to the euro’s fiscal rules, they were vulnerable to a property bust or that Portugal and Italy were trapped by slow growth and declining competitiveness.

A break-up, many argue, would allow individual countries to restore control over monetary policy. A cheaper currency would help match wages with workers’ productivity, for a while at least. Advocates of a break-up imagine an amicable split. Each government would decree that all domestic contracts — deposits and loans, prices and pay — should switch into a new currency. To prevent runs, banks, especially in weak economies, would shut over a weekend or limit withdrawals. To stop capital flight, governments would impose controls.

All good, except that the people who believe that countries would be better off without the euro gloss over the huge cost of getting there. Even if this break-up were somehow executed flawlessly, banks and firms across the continent would topple because their domestic and foreign assets and liabilities would no longer match. A cascade of defaults and lawsuits would follow. Governments that run deficits would be forced to cut spending brutally or print cash.

And that is the optimistic scenario. More likely, a break-up would take place amid plunging global share prices, a flight to quality, runs on banks, and a collapse in output. Devaluation in weak economies and currency appreciation in strong ones would devastate rich-country producers. Capital controls are illegal in the EU and the break-up of the euro is outside the law, so the whole union would be cast into legal limbo. Some rich countries might take advantage of that to protect their producers by suspending the single market; they might try to deter economic migrants by restricting freedom of movement. Practically speaking, without the movement of goods, people or capital, little of the EU would remain.

The heirs of Schuman and Monnet would struggle to restore the Europe of 27 when

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it had been the cause of such mayhem — even if a euro-rump of strong countries emerged. Collapse would be a gift to anti-EU, anti-globalisation populists, like France’s Marine Le Pen. There would be so many people to blame: Eurocrats, financiers, intransigent Germans, feckless Mediterraneans, foreigners of all kinds. As national politics turned ugly, European co-operation would break down. That is why this newspaper thinks willingly abandoning the euro is reckless. A rescue is preferable to a break-up.

A problem shared

But not just any rescue. Too much of the debate over how to save the euro puts the emphasis merely on a plan for growth. That would help, because growth makes debt more manageable and banks healthier. Mrs. Merkel should have been more accommodating on this. But any realistic stimulus would be too modest to stem the crisis. The ECB could and should cut rates and begin quantitative easing, but official funds for investment are limited. More ambitious ways of boosting growth, such as the completion of a single European market for services, are sadly not even on the table.

In any case, the euro zone’s troubles run too deep. Banks and their governments are propping each other up like Friday-night drunks. The ECB’s support for the banks cannot prevent the weak economies of Spain, Portugal, Italy and Ireland from enfeebling their banks and governments. For as long as bond yields are high and growth is poor, sovereigns will face doubt about their capacity to service their debt and banks will see loans go bad. Yet that same uncertainty pushes up sovereign yields and stops bank lending, further inhibiting growth. Fear that the state might have to deal with a banking collapse makes government bonds riskier. Fear that the state could not cope makes a banking collapse more likely.

That is why we have reluctantly concluded that the nations in the euro zone must share their burdens. The logic is straightforward. The euro zone’s problem is not the debt’s size, but its fragmented structure. Taken as a whole, the stock of euro-zone public debt is 87 % of GDP, compared with over 100 % in America. Similarly, the banks are not too big for the continent as a whole, just for individual governments. To survive, Europe has to become more federal: the debate is how much more.

(The Economist)

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12.1Read the text thoroughly and be ready to arrange the following statements into the logical order of the text:

1 The euro zone needs a plan.

2 The ECB could and should cut rates and begin quantitative easing, but official funds for investment are limited.

3 Chancellor Angela Merkel maintains that the threat of the euro’s failure is needed to keep wayward governments on the path of reform.

4 Separate or superstate: those seem to be the alternatives now.

5 To survive, Europe has to become more federal: the debate is how much more. 6 Devaluation in weak economies and currency appreciation in strong ones would

devastate rich-country producers.

7 Practically speaking, without the movement of goods, people or capital, little of the EU would remain.

8 Each government would decree that all domestic contracts—deposits and loans, prices and pay—should switch into a new currency.

12.2Match the words with their definitions:

smaller parts

10) straightforward 10) the amount of debt that must be paid

12.3 Insert the correct preposition.

1One road leads … the full break-up of the euro, … all its economic and political repercussions.

2… two crisis-plagued years Europe’s leaders have run away … this choice.

3A cheaper currency would help match wages … workers’ productivity, for a while … least.

4To prevent runs, banks, especially … weak economies, would shut … a weekend or limit withdrawals.

5Practically speaking, … the movement … goods, people or capital, little … the EU would remain.

6Too much … the debate … how to save the euro puts the emphasis merely … a plan for growth.

7Similarly, the banks are not too big … the continent as a whole, just … individual governments.

12.4 Say whether the statement is true or false. If the statement is false, give the correct variant:

1Northern American creditors, led by Germany, will not pay out enough to assure the euro’s survival.

2Though Ireland and Spain kept to the euro’s fiscal rules, they were vulnerable to a property bust.

3A break-up, many argue, would allow individual countries to restore control over foreign policy.

4The ECB’s support for the banks cannot prevent Spain, Portugal, Italy and Ireland from enfeebling their banks and governments.

5The stock of America’s public debt is 100% of GDP. 12.5 Answer the following questions.

1What will become of the European Union?

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2Under what conditions will a grand deal to save the single currency be seen as legitimate?

3Where will Europe’s choice be made?

4What troubles many Europeans?

5What would a break-up allow individual countries?

6What would a cheaper currency help do?

7Where are capital controls illegal?

8What would happen without the movement of goods, people or capital?

9What cannot the ECB’s support for the banks prevent the weak economies of Spain, Portugal, Italy and Ireland from?

10What is the stock of euro-zone public debt, taken as a whole?

12.7 Finish the following sentences using the original text:

1Chancellor Angela Merkel maintains that the threat of the euro’s failure is needed to… .

2Whether or not Greece stays in the euro,… .

3Advocates of a break-up imagine an amicable split. Each government would decree that all domestic contracts—deposits and loans, prices and pay—should… .

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4Capital controls are illegal in the EU and the break-up of the euro is outside the law, so… .

5Banks and their governments are propping each other up like… .

6Taken as a whole, the stock of euro-zone public debt is 87% of GDP,… .

12.8 Choose the correct variant.

1 For … crisis-plagued years Europe’s leaders have run away from this choice.

10 To survive, Europe has to become more …: the debate is how much more.

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12.9Write out key expressions. Make up a plan for retelling.

12.10Be ready to retell the text in class.

13 Unit 13 Oil prices

Everyone knows why oil prices, at around $125 for a barrel of Brent crude, are so high. The long-term trends are meagre supply growth and soaring demand from China and other emerging economies. And in the short term, the market is tight, supplies have been disrupted and Iran is making everyone nervous.

Saudi Arabia, the only OPEC member with enough spare capacity to make up supply shortfalls, is the best hope of keeping the market stable. The Saudis recently reiterated their pledge to keep the market well supplied as American and European Union sanctions hit Iran. Over time, other producers in the Persian Gulf may be able to pump more. Iraq—and Iran itself—have vast oilfields that could eventually provide markets with millions more barrels a day (b/d). All this is conventional wisdom.

Yet these calculations do not take account of the region’s growing thirst for its own oil. Between 2000 and 2010 China increased its consumption of oil more than any other country, by 4,3 m b/d, a 90 % jump. It now gets through more than 10 % of the world’s oil. More surprising is the country that increased its consumption by the second-largest increment: Saudi Arabia, which upped its oil-guzzling by 1,2 m b/d. At some 2,8 m b/d, it is now the world’s sixth-largest consumer, getting through more than a quarter of its 10 m b/d output.

Saudi Arabia is not the only oil-producer that chugs its own wares. The Middle East, home to six OPEC members, saw consumption grow by 56 % in the first decade of the century, four times the global growth rate and nearly double the rate in Asia (see map).

Energy use per head is also rising. According to BP, in 1970 in the Middle East it was half what it was in other emerging markets. By 2010 it was three times higher. Global oil consumption stayed at roughly 4,6 barrels a head annually between 2000 and 2010, but the average Iranian and Saudi was getting through roughly 30 % more by the end of the

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decade. The Saudis consume 35,1 barrels each. Overall energy consumption per head, at 7,3 tonnes of oil equivalent, is roughly the same as in America (see chart), which is much richer.

There are three explanations for this growing taste for oil. The first is demography. Populations in the Persian Gulf, and in OPEC as a whole, are growing fast. Tiny Qatar’s population trebled between 2000 and 2010. Saudi Arabia’s grew from around 20 m to 27,4 m, a 37 % increase. Demand for power, water and petrol has risen accordingly. Saudi power-generating capacity has doubled in the past decade. Partly this is to mitigate the fearful heat: according to a report from Chatham House, a think-tank, air-conditioning units soak up half of all power generated at peak consumption periods.

The second relates to economic structure. It takes energy to produce energy: pumps must be powered and vast quantities of seawater desalinated. Aramco, the Saudi state oil company, sucks up nearly 10 % of the country’s energy output. Attempts to diversify the Saudi economy beyond oil, gas and petrochemicals have not gone far (see figure 8).

Figure 8

The third reason for rising Gulf consumption is the inefficiency of domestic energy markets. Some 65 % of Saudi electricity is generated using black gold, even as successive price shocks and the relative inefficiency of oil generation have seen it all but phased out in rich countries. Oil is used with such profligacy because domestic consumption is

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massively subsidised. According to the International Energy Agency, global oil subsidies added up to $192 billion in 2010. OPEC countries accounted for $121 billion of the total.

Saudi Arabia has the cheapest fuel in the Gulf and dirt-cheap electricity, too. This has alleviated poverty but it has also encouraged an American-style driving culture (for men) and limited public transport. Only a third as many Saudis own cars as Americans; as they get richer many more will take to the desert highways.

Many oil-producing countries (including Saudi Arabia) have pledged to cut subsidies. But this is hard to do when regimes are terrified of unrest (and often unelected). Violent protests greeted Nigeria’s attempts in January to raise the price of imported petrol. Only Iran, which had the most generous subsidy regime, has managed a big price hike— and it had a handy scapegoat in the form of sanctions.

It is costing Saudi Arabia dear to burn through so much oil. With “lifting” costs of $3 to $5 a barrel the fuel is cheap but the opportunity cost, given a global price of $125, is huge. And like many Gulf oil producers Saudi Arabia has failed to use its abundant natural-gas supplies properly (see figure 9).

Figure 9

Gas does now contribute 35 % to power generation, but rock-bottom prices and a sniffiness about gas as oil’s poor relation mean that exploiting its bounty (Saudi Arabia apparently has the world’s fifth-largest gas reserves) has proven hard. Initiatives to attract

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Western oil companies to get at the gas foundered as low prices and stingy terms failed to attract bidders. Much of the “unassociated” gas that doesn’t spew out alongside oil is tough to extract, and would require prices four or five times higher than now to make it worthwhile. According to BP, oil makes up 74 % of the region’s energy production. By 2030 it will have dropped only to 67 %.

Saudi Arabia is trying to develop nuclear and solar energy. But its fleet of oil-fired power stations will keep going for years. And as Mark Lewis of Deutsche Bank points out, two more big ones are now being built. On current trends the kingdom would become a net importer of oil by 2038 (unlikely though that is).

This puts big strains on oil markets. In the short term Saudi spare capacity is an important factor in oil prices. As the year progresses seasonal Saudi demand is likely to jump. Last year the upswing between March and July was some 750,000 barrels of fuel a day, according to Barclays Capital. Much of that will be driven by air conditioners working overtime. This will put pressure on the country’s ability to maintain exports and keep oil prices stable.

The longer-term picture is equally worrying. Global demand for oil is projected to rise to over 100 m b/d by 2030. The Gulf states of Saudi Arabia, Iran and Iraq, which have vast and easily accessible reserves, are regarded as the obvious sources of new supply. But Iranian oil production will decline as sanctions bite and the country loses access to equipment and expertise. Iraq, currently producing 3 m b/d, has the reserves to increase production significantly. But fragile politics, dodgy security and a battered oil infrastructure are deterring the investment required to boost supplies. And Saudi Arabia’s thirst for its own oil shows little sign of abating. The Gulf is usually seen as the answer to the world’s oil problems, but it looks ever more like a question-mark instead.

(The Economist)

13.1 Read the text thoroughly and be ready to arrange the following statements into the logical order of the text:

1Saudi Arabia is trying to develop nuclear and solar energy.

2There are three explanations for this growing taste for oil.

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