Contradictions

Keiser : Feckless parents vs reckless banks

Putin rattled by 'unprecedented' protests

Troops and riot police clashed with pro-democracy protesters in Moscow for the second night running on Tuesday. But in the wake of allegations of election fraud, Russian Prime Minister Vladimir Putin is unlikely to relinquish his grip on power.

Russian Prime Minister Vladimir Putin’s response to the unexpected results of last weekend’s national elections, which saw his United Russia party scrape just enough seats for a majority, was just to shrug his shoulders.

Despite preliminary results revealing his party polled less than 50 percent of the vote, a staggering drop of 15 percent from 2007, Putin simply described the losses as “inevitable for any political force” in the current economic climate.

If his reaction to the election results appeared rather nonchalant, Putin’s response to two days of unprecedented demonstrations by protesters angered by allegations of election fraud was certainly not.

Thousands of Interior Ministry troops and riot police flooded the streets to deal with the protesters and by Tuesday night over 500 had been arrested in Moscow alone. According to Russian news agencies, another 200 pro-democracy protesters were detained in St Petersburg after defying a ban on demonstrating. Activists were given swift justice with one protest organiser Ilya Yashin, a prominent blogger, handed a 15-year jail term.

“Putin will ignore his own advice”

Professor Emeritus Margot Light from the London School of Economics (LSE) believes Putin, rather than bowing to protesters’ demands, will simply tighten his grip in the coming days.

“Putin is likely to ignore the advice he himself gave President Assad in Syria which was that he should work with the opposition,” Prof Light, an expert in Russian politics, told FRANCE 24.

“The protests against him are unprecedented, but he is likely to match it by upping the repression and that will be awful. He has always clamped down on any public protests or demonstrations so these arrests are not uncommon. It’s his style.”

Despite Putin’s stern response, Professor Light believes the strongman has been shaken by the protests which are a clear sign of the first “chink in his armour”.

That chink was first noticed just weeks ago when he was booed by the crowd at a martial arts contest in Moscow in an extraordinary show of public protest. Prominent activist and blogger Alexei Navalny, who was also arrested in Monday’s protests, described the public show of discontent as the “end of an era”.

Putin will stand in the presidential elections next spring after which he is expected to regain a position he held between 2000 and 2008. But even if he has been undermined this week, chances are he won’t be floored by the ongoing protests.

“He is a shoe-in to become the next President of Russia in the elections next year because he is only up against himself,” said FRANCE 24’s international affairs editor Douglas Herbert.

400 papers all marked in the same way

United Russia will only take 238 seats in the 450-seat Russian state Duma. What is perhaps surprising is that United Russia’s poor performance came amid widespread allegations of election fraud aimed at swinging the ballot in their favour.

The Office for Democratic Institutions and Human Rights (ODIHR), which was tasked with observing the Russian elections, witnessed a number of irregularities on the day of the election.

Jens-Hagen Eschenbaecher, a spokesman for the ODIHR, told FRANCE 24 that “procedures were not followed” during the vote count and there was clear evidence of fake voting papers being stuffed into ballot boxes.

“I spoke to one delegate who said they saw an open ballot box with 400 papers all marked in the same way for one party and they were all folded together in a stack,” he said.

Mr Eschenbaecher said the focus will now be on how Putin and United Russia deal with the allegations of election fraud.

“Our monitors will stay in the country for the next three weeks. We will follow events and how the appeals and complaints process is handled by the authorities and to what extent they are going to investigate them,” he said.

Internet is fuelling the protests

For some observers of Russian politics, irregularities are nothing new. What changed this time is the fact that the public is now armed with new technology and the internet.

Bloggers have openly ridiculed the results and photos claiming to prove voting election fraud emerged on internet sites such as Twitter.

“The internet played a very important and possibly decisive role in changing people’s attitudes towards elections,” independent political analyst Dmitry Oreshkin told the AFP news agency. “The number of actual irregularities may not have grown, but people’s response to them was much stronger”.

According to FRANCE 24's Douglas Herbert, Russia's youth are internet savvy. “They have access to Facebook and Twitter as well as hand-held cameras and smart phones. So the police and Putin’s political machine cannot get away with things anymore,” he said.

But Professor Light of LSE believes Twitter and Facebook could come under Putin’s radar if the protests do not die down.

“The interesting thing is that although there has been a lot of interference on the internet, they have up to now left Facebook and Twitter alone but we are likely to see that changing now as part of his crackdown,” she said.

An Arab Spring inspired regime change is not on the cards in Moscow but if the protests and the crackdown continue Putin could be receiving the same kind of advice he gave to Syria.

Iran's Guards on war footing – London. Spy drone capture is US, Israel setback

Iran's Supreme Leader Ayatollah Ali Khamenei has placed the Revolutionary Guards on a war footing amid fears that the West and Israel are about to attack their nuclear program, the London Telegraph, which has good ties with British intelligence, reported early Tuesday, Dec. 6.
Monday, DEBKAfile reported increasing indications that the Middle East is set for war, including an attack on Iran, between mid-December 2011 and mid-January 2012.
In obedience to Khamenei's directive to take all necessary measures to protect the regime, the Guards chief Gen. Mohammed Ali Jaafari has raised the operational readiness status of the country's forces in preparation for external strikes and covert attacks. He ordered Iran's arsenal of long-range Shahab missiles redistributed to secret sites around the country where they would be safe from enemy attack and could be used to launch retaliatory strikes; Guards units scattered to preset defense lines and air force "rapid reaction units" deployed after carrying out extensive exercises for responding to an enemy air attack on nuclear and strategic military targets.
Saturday, Dec. 3, Israel's defense minister Ehud Barak, when asked about a covert war against Iran, denied it was taking place. Twenty-hours later, this clandestine war peaked in a major coup for Iran, its capture of the sophisticated US RQ-170 Sentinel stealth reconnaissance drone. Tehran reported that, apart from slight damage, the aircraft was shot down complete with all its top-secret electronic systems in working condition.
An American military source confirmed that Iran had the RQ-170, but added there was "absolutely no indication the drone was shot down."

This leads to the conclusion that the Iranians were able to control the drone from a distance (over Afghanistan) and guide it across the border to land to Iran, say DEBKAfile's military sources. The slight damage would then apply to the wings and may have been caused when it was brought in to land by an Iranian crew unused to handling an electronic warfare craft.
Our sources add that possession of the drone is more than just a major intelligence coup for Tehran; it has acquired an important military edge before any overt military operation has been launched. Western and Israeli war planners now have cause to fear that Iran has penetrated the heart of their most secret intelligence and electronic technological hardware for striking its nuclear infrastructure. If Tehran is capable of reaching out and guiding an American stealth drone into landing from a distance, it may also be able to control the systems of other aircraft, manned or unmanned.

This feat recalls Hizballah's surprise attack on an Israeli missile boat  in the 2006 Lebanon war when its Chinese-made shore-to-ship C-802 missile was enabled by Iranian-manned coastal radar interference to override the ship's advanced electronic defense systems and so put the Israeli Navy out of action within range of the Lebanese coast.

According to an expert quoted by the Telegraph's senior military commentator Con Coughlin, the campaign of assassinations, cyber war and sabotage of recent weeks "looks like the 21st century form of war. 

Defka Files

Kabul blast video: First seconds after Shiite holiday attack

China tells navy to prepare for combat

AFP

Chinese President Hu Jintao has urged the country's navy to prepare for military combat and advance naval modernisation as part of efforts to safeguard world peace.

The navy should "accelerate its transformation and modernisation in a sturdy way, and make extended preparations for military combat in order to make greater contributions to safeguard national security and world peace", Hu said in a speech on Tuesday that comes amid US and regional concerns over China's naval ambitions.

According to a statement on the government's website, Hu was speaking to the nation's powerful Central Military Commission at a meeting in Beijing focused on military armament and the latest developments in the navy.

"Our work must closely encircle the main theme of national defence and military building," Hu said, according to the statement.

In a translation of Hu's comments, the official Xinhua news agency quoted the president as saying China's navy should "make extended preparations for warfare", strengthening the term "junshi douzheng" that can be also translated as "military combat" or "military struggle".

Hu's comments come after China said late last month it would conduct naval exercises in the Pacific Ocean, following a major diplomatic campaign by President Barack Obama to assert the United States as a Pacific power.

The defence ministry said the exercises did not target any particular country, but the announcement comes against a background of growing tensions over maritime disputes in the Asia-Pacific region.

Chinese Premier Wen Jiabao last month also warned against interference by "external forces" in regional territorial disputes including in the South China Sea, a strategic and resource-rich area where several nations have overlapping claims.

China claims all of the maritime area, as does Taiwan, while four South-East Asian countries declare ownership of parts of it, with Vietnam and the Philippines accusing Chinese forces of increasing aggression there.

On Wednesday, US undersecretary of defence Michelle Flournoy is slated to hold military-to-military talks with her Chinese counterparts in Beijing, China announced last week.

China's People's Liberation Army, the largest military in the world, is primarily a land force, but its navy is playing an increasingly important role as Beijing grows more assertive about its territorial claims.

Earlier this year, the Pentagon warned that Beijing was increasingly focused on its naval power and had invested in high-tech weaponry that would extend its reach in the Pacific and beyond.

China's first aircraft carrier began its second sea trial last week after undergoing refurbishments and testing, the government said.

The 300-metre ship, a refitted former Soviet carrier, underwent five days of trials in August that sparked international concern about China's widening naval reach.

Beijing only confirmed this year that it was revamping the old Soviet ship and has repeatedly insisted that the carrier poses no threat to its neighbours and will be used mainly for training and research purposes.

But the August sea trials were met with concern from regional powers including Japan and the United States, which called on Beijing to explain why it needs an aircraft carrier.

China, which publicly announced around 50 separate naval exercises in the seas off its coast over the past two years, usually after the event, says its military is only focused on defending the country's territory.

Senator Ran Paul on happening now with Jon Scott

Police arrest 300 at another opposition protest in Moscow

'Saudi Arabia may join nuclear arms race'

Ex-spy chief says Saudi Arabia to consider acquiring atom weapons to match region rivals Israel, Iran

Saudi Arabia may consider acquiring nuclear weapons to match regional rivals Israel and Iran, its former intelligence chief Prince Turki al-Faisal said on Monday.

"Our efforts and those of the world have failed to convince Israel to abandon its weapons of mass destruction, as well as Iran... therefore it is our duty towards our nation and people to consider all possible options, including the possession of these weapons," Faisal told a security forum in Riyadh.


"A (nuclear) disaster befalling one of us would affect us all," said Faisal.

Israel is widely held to possess hundreds of nuclear missiles, which it neither confirms nor denies, while the West accuses Iran of seeking an atomic bomb, a charge the Islamic Republicrejects.

Riyadh, which has repeatedly voiced fears about the nuclear threat posed by Shiite-dominated Iran and denounced Israel's atomic capacity, has stepped up efforts to develop its own nuclear power for "peaceful use."

Ynet

Citigroup to cut 4,500 jobs worldwide

US banking giant, Citigroup, has said it is to cut 4,500 jobs around the world in an effort to reduce its costs.

The group has put aside $400m (£250m) to pay for the cuts, according to its chief executive Vikram Pandit.

The money will be written down in the company's fourth quarter results.

It is the latest in a string of global banks to announce cuts as the slowdown in the world economy and the European sovereign debt crisis has increased pressure on banks to limit costs.

They include Citygroup rivals such as HSBC, Bank of America and UK-based Lloyds.

Speaking at the Financial Services Conference hosted by Goldman Sachs in New York, Mr Pandit said his bank had saved more than $1.4bn so far this year.

BBC

Greek parliament passes new austerity budget

Greece's parliament has approved the 2012 austerity budget designed to tackle the country's huge debts that threaten the entire eurozone.

The budget, which includes further tax rises and spending cuts, was proposed by the interim coalition government of former bank governor Lucas Papademos.

The bill passed after police again clashed with protesters in Athens.

Backing the budget, the opposition leader said he may review the plans if elected in next year's expected poll.

"Our disagreements remain... we are approving the budget because it is an absolute priority to safeguard the viability of Greek debt," said Antonis Samaras, leader of New Democracy.

The budget for 2012 is designed to cut the deficit to 5.4% of GDP from a projected 9% this year and to generate a primary surplus.

Such a surplus would mean that Greece only needs to borrow money in order to continue servicing the interest on its existing debt.

"Successful implementation of this budget will restore the country's international credibility and create the conditions to rescue the economy," said Mr Papademos.

The unelected former banker took office on 11 November at the head of a broad coalition government following the collapse of the Socialist cabinet of George Papandreou.

BBC

Anxious Greeks Emptying Their Bank Accounts

Many Greeks are draining their savings accounts because they are out of work, face rising taxes or are afraid the country will be forced to leave the euro zone. By withdrawing money, they are forcing banks to scale back their lending -- and are inadvertently making the recession even worse.

Georgios Provopoulos, the governor of the central bank of Greece, is a man of statistics, and they speak a clear language. "In September and October, savings and time deposits fell by a further 13 to 14 billion euros. In the first 10 days of November the decline continued on a large scale," he recently told the economic affairs committee of the Greek parliament.

With disarming honesty, the central banker explained to the lawmakers why the Greek economy isn't managing to recover from a recession that has gone on for three years now: "Our banking system lacks the scope to finance growth."

He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion -- by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October -- the biggest monthly outflow of funds since the start of the debt crisis in late 2009.

The raid on bank accounts stems from deep uncertainty in Greek households which culminated in early November during the political turmoil that followed the announcement by then-Prime Minister Georgios Papandreou of a referendum on the second Greek bailout package.

Papandreou withdrew the plan and stepped down following an outcry among other European leaders against the referendum, and a new government was formed on Nov. 11 under former central banker Loukas Papademos. That appears to have slowed the drop in bank savings, at least for the time being.

Bank Withdrawals Worsening Crisis

Nevertheless, the Greeks today only have €170 billion in savings -- almost 30 percent less than at the start of 2010.

The hemorrhaging of bank savings has had a disastrous impact on the economy. Many companies have had to tap into their reserves during the recession because banks have become more reluctant to lend. More Greek families are now living off their savings because they have lost their jobs or have had their salaries or pensions cut.

In August, unemployment reached 18.4 percent. Many Greeks now hoard their savings in their homes because they are worried the banking system may collapse.

Those who can are trying to shift their funds abroad. The Greek central bank estimates that around a fifth of the deposits withdrawn have been moved out of the country. "There is a lot of uncertainty," says Panagiotis Nikoloudis, president of the National Agency for Combating Money Laundering.

The banks are exploiting that insecurity. "They are asking their customers whether they wouldn't rather invest their money in Liechtenstein, Switzerland or Germany."

Nikoloudis has detected a further trend. At first, it was just a few people trying to withdraw large sums of money. Now it's large numbers of people moving small sums. Ypatia K., a 55-year-old bank worker from Athens, can confirm that. "The customers, especially small savers, have recently been withdrawing sums of €3,000, €4,000 or €5,000. That was panic," she said.

Marina S., a 74-year-old widow from Athens, said she has to be extra careful with money these days. "I have no choice but to withdraw money from my savings," she said.

Bad Loans

The shrinking Greek bank deposits compare with bank loans totalling €253 million. Analysts say the share of bad loans could rise to 20 percent next year, or €50 billion, as a result of the recession. This in turn will worsen the already pressing liquidity problems faced by Greek banks.

Nikos B., a doctor in the Greek military, has had enough of the never-ending crisis his country is going through. While the 31-year-old has a secure job, repeated salary cuts have made it increasingly hard for him to make ends meet.

He needs most of his money to make loan repayments for a small car. "How can I clear my account? There's hardly anything in it," he says. He started learning German two months ago and wants to leave Greece. "As soon as possible!"

Nikos pauses and looks down. He quietly utters words that must be painful for a proud Greek. "It would be best to change nationality."
Spiegel

Debt crisis: all 17 eurozone countries face losing AAA credit status

Standard and Poor’s, a credit-rating agency, said all 17 eurozone members, including France and even Germany, could lose their AAA ratings without speedy action to resolve the crisis.

A downgrade would effectively scupper the euro rescue because the EUbail-out fund would no longer be able to raise money on bond markets.

S+P has told eurozone countries including Germany, France, the Netherlands, Austria, Finland, and Luxembourg that they could be downgraded because of the failure of leaders to resolve the debt crisis.

The “lack of progress the European policy-makers have so far made in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union,” the agency is said to have told them.

The warning overshadowed the latest Franco-German attempt to agree a treaty creating a fiscal union in the eurozone. Angela Merkel and Nicolas Sarkozy yesterday warned David Cameron that they will push ahead with their new treaty whether or not Britain signs up.

The challenge came as Mr Cameron hit back at Iain Duncan Smith and other Tory eurosceptics who have suggested that any change in EU rules should be put to the British people in a referendum.

Mrs Merkel and Mr Sarkozy met yesterday in Paris to discuss a new European treaty to create a “golden rule” of balanced budgets for eurozone states. Members would face automatic sanctions for large deficits.

Financial markets rose after the meeting as traders calculated that the plan would protect indebted countries such as Italy and Greece. The rally came even though Germany backed away from plans to let the European Court of Justice veto national budgets that would run up excessive debts.

The two leaders also made no progress on letting the European Central Bank intervene in the crisis.

Mrs Merkel and Mr Sarkozy said the new treaty should be agreed by March. The details will be debated by EU leaders at a summit in Brussels on Thursday. Herman Van Rompuy, the EU president, said the summit will determine “the survival of the euro”.

Critically for Mr Cameron, France and Germany said that they were now willing to agree a deal among only the 17 eurozone members instead of also getting the consent of the 10 EU members who do not use the single currency. Mr Sarkozy said all leaders will be asked for their decision in Brussels. “We will go around the table, and then we will see if we have an agreement of the 27 or an agreement of the 17,” he said.

The challenge leaves Mr Cameron choosing between two options that allies admit are both likely to trigger a Conservative rebellion. Some senior Conservatives believe a treaty signed by only 17 states would accelerate a two-speed Europe where euro members would form a “caucus” that could push through financial regulations and damage the City.

A treaty of all 27 EU states would expose Mr Cameron to Tory demands to win back British powers from Brussels in exchange for his consent, and bolster calls for the new text to be put to British people in a referendum.

Mr Cameron is said to lean towards a 27-member treaty, but is also prepared to see the 17 euro members go alone. Government sources last night admitted it would be “difficult”

to avoid a eurozone-only treaty. Chris Heaton-Harris, a leading Conservative eurosceptic, said that a 17-nation treaty would create “an awful lot of caucusing of power around the eurozone countries, which directly affects how the UK is represented in the EU”.

Iain Duncan Smith, the Work and Pensions Secretary, is among Tories who have suggested that a “major treaty change” would automatically trigger a referendum under the European Union Act. The Prime Minister’s spokesman said Mr Duncan Smith’s interpretation of the law was incorrect: “That is not what is set out in the Act.”

Mr Cameron insisted that he had no intention of holding a referendum. “As prime minister, I am not intending to pass any powers from Britain to Brussels. So I don’t think the issue will arise.”

Even if Mr Cameron could beat back a Tory call for a referendum after a 27-nation treaty, he would still face intense pressure to regain British control over social and employment legislation.

An aide to Owen Paterson, the eurosceptic Northern Ireland Secretary, said a new treaty was “a major opportunity” for Mr Cameron to begin a repatriation of powers to the UK.

The Telegraph

Israel and Syria brace for regional war between mid-Dec. 2011 and mid-Jan 2012

The actions and words of Israeli Prime Minister Binyamin Netanyahu and Syrian ruler Bashar Assad in the last 72 hours indicate they are poised for a regional war, including an attack on Iran, for some time between December 2011 and January 2012.

In their different ways, both have posted road signs to the fast-approaching conflict as DEBKAfile's Middle East sources disclose:

1.  Saturday, Dec. 3, Syria staged a large-scale military exercise in the eastern town of Palmyra, which was interpreted by Western and Israeli pundits as notice to its neighbors, primarily Turkey and Israel, that the uprising against the Assad regime had not fractured its sophisticated missile capabilities.

DEBKAfile's military sources advise attaching more credibility to the official Damascus statement of Sunday, Dec. 4: "The Syrian army has staged a live-fire drill in the eastern part of the country under war-like circumstances with the aim of testing its missile weaponry in confronting any attack."
Videotapes of the exercise, briefly carried on the Internet early Monday before they were removed by an unseen hand, support this statement. They showed a four-stage exercise, in which missile fire was a minor feature. Its focus was on the massive firing of self-propelled 120mm cannon, brigade-strength practice of 600mm and 300mm multiple launch rocket systems (MLRS), offensive movements of Syrian armored brigades backed by ground-to-ground missiles with short 150-200 kilometer ranges. They drilled tactics for repelling enemy reinforcements rushed to combat arenas.
All this added up to is an impressive Syrian demonstration of its ability to ward off an attack on Syrian soil by turning a defensive array into an offensive push for taking the battle over into the aggressor's territory, whether the Turkish or Israeli armies or a combined Arab League force backed by NATO.

2.  Israel made its rejoinder to the Syrian war message 24 hours later.

Addressing a ceremony honoring the memory of for Israel's founding father David Ben-Gurion, Netanyahu recalled how 63 years ago, Ben-Gurion declared the foundation of the State of Israel in defiance of pressures from most of Western leaders and a majority of his own party. They warned him that he would trigger a combined Arab attack to destroy the fledgling state  just three years after the end of World War II.

But fortunately for us, said the prime minister, Ben-Gurion stood up to the pressure and went through with his decision, otherwise Israel would not be here today.

"There are times," said Netanyahu, "when a decision may carry a heavy price, but the price for not deciding would be heavier."

"I want to believe," he said, "we will always have the courage and resolve for the right decisions to safeguard our future and security."

Although he did not mention Iran, it was not hard to infer that the prime minister was referring to a decision to exercise Israel's military option against Iran's nuclear program in the face of crushing pressure from Washington and insistent advice of certain Israeli security veterans.

Defense minister Ehud Barak, who was standing behind the prime minister's shoulder, was as tense as a coiled spring.

3. Six hours later, Netanyahu dropped a bombshell on the domestic political scene: He announced his Likud party would hold elections, including primaries, before January 31, 2012 - two years before schedule and a year before Israel's next general election. As head of one of the most stable and long-lived coalition governments ever to have ruled Israel, he is under no pressing domestic need of a demonstration of leadership at this time.
4.  In the last two weeks, the Netanyahu government has been subjected to acerbic criticism on the part of one Obama administration official after another. They have presented Israel as having fallen into the hands of right-wing extremists who are engaged in a mad race to suppress the judiciary and diminish the civil rights of women and children – not to mention Palestinians.

Secretary of State of Hillary Clinton went to unimaginable lengths when she likened Israel to Iran because fringe ultraorthodox group's in a couple of suburbs in Jerusalem and Bnei Brak were fighting for gender segregation on public transport against the government and the courts.

She was clearly aiming to undermine the Netanyahu government's democratic credentials - and therefore his moral legitimacy - for going to war to halt Iran's attainment of a nuclear weapon.
4.  The unusually powerful US and Russian naval buildups in the waters around Syria and Iran.
Washington sought in late November to give the impression that the George H.W. Bush Carrier Strike Group was anchored off Marseilles, when it was spotted in the eastern Mediterranean opposite Syria.

Moscowthen rushed to Syria's defense by airlifting 72 anti-ship Yakhont missiles (Western-coded SSN-26) to Damascus. These water-skimming weapons can hit naval targets at a distance of 300 kilometers.

After that the Bush, whose freedom to approach Syrian or Lebanese shores, had been curtailed by the new weapon reaching Syria, departed to an unknown destination, while the USS Carl Vinson strike group took up position opposite Iran.

Moscowis also playing hide and seek with its only air carrier Admiral Kuznetsov. It was announced that the vessel would set sail for the Mediterranean on Dec. 6. But on Nov. 25, it was sighted passing Malta and chugging past Cyprus four days later on its way to join the flotilla of three Russian guided missile destroyers already anchored off Syria.

Neither the United States nor Russia would have concentrated two powerful fleets in the proximity of Syria and Iran unless they were certain a military conflagration was imminent. While any of the prime movers, Washington, Moscow, Tehran, Israel or Bashar Assad, may at the last moment step back from the brink of a regional war, at the moment, there is no sign of this happening.

Defka Files

Worst drought in 200 years paralyses Danube river shipping

The level of Europe's second largest river has fallen to a trickle in places as result of a lack of rain in Eastern Europe and the Balkans. An estimated 80 cargo ships are stranded on the Hungary-Serbia border.

"In my many years of experience as a boat captain, I don't remember a drought as harsh as this one," said Anton Balasz, whose Hungarian ship is stranded on an exposed sand bank.

The Danube flows for 1,777 miles passing through eight countries before pouring into the Black Sea, providing one of Europe's most vital and busiest transport routes.

So dry is the Danube that shipping has been put at risk as unexploded bombs and sunken Second World War warships emerge from the water as the river shrinks to expose banks that have not seen the light of day for centuries.

Parts of central Europe have had their driest November since records began in 1775.

The current level of the river in Bulgaria is at its lowest since 1941 and shipping on large stretches of the river has ground to a halt.

Cargo shipping on the Danube is only at 25 per cent of the usual volume due to the low water levels, with cargo being diverted onto roads and rail, the Austrian waterway organisation Via Donau said.

"There is just no water. The situation is critical not only here on the lower Danube but also upriver in Hungary, Austria, Germany," said Ivan Ivanov, deputy chief of Bulgarian River Shipping. "Shipping costs are soaring, I don't even want to calculate our losses."

Branko Savic, the manager of a Danube shipping company in Serbia, described the drought as "a disaster". "Traffic on the Danube is practically non-existent. We are in dire need of enormous amounts of water, rain, or melting snow," he said.

The British based Europe River Cruises said that none of its operators were currently reporting problems ahead of the busy Christmas period but that alternative transport would be found if necessary.

"Our Christmas market tours will not be affected because if boats cannot navigate the river then we will take people by coach," said a spokesman.

Meteorologists are at a loss to explain the drought which has caused a series of problems throughout the area. Hydro-power supplies are running low in Serbia, drinking water shortages have hit Bosnia and crops are threatened in Romania, Bulgaria and Hungary.

Environmentalists are also concerned and a World Wildlife Fund report has noted a sharp drop in bird populations along the lower stretch of the Danube.

The Telegraph