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Fiat plans to expand manufacturing in Italy by making the Panda small car in Italy instead of using a plant in Poland. This would expand production by Fiat in Italy from 650,000 to 900,000 cars, with an investment of 8 billion euros in 2 years. One of 5 unions gets 40% of the vote at the Fiat plant in southern Italy that will make the Panda. Fiat had asked for new working conditions at the plant in exchange for its investment and a new social pact with the unions.

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Fiat's Marchionne's decision to focus on the Fiat 500 and the Panda city car in the price sensitive European market. Fiat has no success in selling its Bravo larger car. In 2011 sales of the Bravo model were only 32,036 compared to VW Golf model sales of 522,370 in Europe, according to IHS Global Insight. Sales of the Fiat 500 were 119,836 units vs. sales of 83,150 for the BMW Mini in the first half of 2012. Fiat has suffered more than other automakers in the European market with sales decline of 16.7% compared to 7.2% decline for the overall market, for Jan-Sept 2012. Fiat's new plans are for five new Fiat models and three new Fiat light trucks in Europe between 2013-2016. Fiat launched the 500L minivan in Europe in Sept 2012. Fiat's European factories are running at 45% of capacity on average, and the European operations are likely to burn through 700 million euros in 2013, similiar to 2012, unlikely to breakeven before 2015 or 2016. This makes getting the product decisions right critical for Fiat. Fiat's chief in Europe, Gianluca Italia talks of the functional and emotional soul of Fiat cars for Europe in a emphasis on making Fiat's models in the price sensitive segments more distinctive and commanding a premium in the European market. Fiat's 500 has about a 25% premium over a similiar Ford Ka in its segment. The new Fiat 500 models will be exported to Asia and Latin America in an effort to increase capacity utlilization in its Italian factories....

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The WP's Adam Taylor gives readers glimpses of Ukraine's and Crimea's history. The Crimea was at various times part of the Greek and Roman Empires as Taurica, the Mongols, the Khanate since 1400, and part of the Russian Empire since 1783. About 60% of the population is Russian in the Crimea, 12% Tartars. Under the Soviet Union it was first the Crimean Autonomous Socialist Republic till 1945 and then Crimean Oblast, an administrative region of Russia. It was made part of Ukraine by Russian premier Krushchev in 1954, Krushchev himself being a Russian who came up through the Ukrainian Communist party. In Dec. 1991 a referendum was held in Ukraine, 54% of Crimean voters favored independence from Russia. Crimea remained part of Ukraine with autonomy including its own constitution, and legislature. A 1997 treaty allowed Russia to base its Black Sea fleet in Sevastopol, Crimea.

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WSJ's Fidler describes the views of Victor Ruhe, a former German defense minister, on the Ukraine crisis and the EU's response. The EU's position for relations with Ukraine comes under criticism for being technocratic as in earler trade and aid negotiations, and not addressing the problems which Ukraine faces. This requires closer cooperation from the EU, and some costs the EU has been unwilling to assume. Ruhe says the best response for the EU is to turn Ukraine into a European success story. This means taking on the effort to gradually transform the corrupt and inefficient political and economic system, something the EU did over many years in the Balkans. EU leaders have signed an agreement with Ukraine's new government on political dialogue and security cooperation. Critical parts of the agreement for trade, law enforcement, anticorruption actions, and macroeconomics changes, will be signed after a new government is elected in May 2014 elections. The EU is in this for the long haul as political support will be needed for a new generation of politicians....

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Chrysler's net income increased in 2012 to $1.67 billion, up from the $183 million in 2011. Revenue was $65.8 billion in 2012, increasing 19.6% over $55 billion in 2011. To see what impact taking ownership stake in Chrysler over four years has accomplished for Fiat one has to consider the losses Fiat would suffer without Chrysler. In France the lack of a foreign presence required Peugeot Citroen to look for government aid. Even the initial investment in Chrysler by Fiat made use of the $2 billion in a breakup fee for an agreement Fiat signed with GM before 2007. Showing the huge dividends Fiat has gained from the new management team installed at Fiat in the last decade. This makeover of Fiat was done using younger managers under an executive from outside the auto industry. That alone would have not saved Fiat, leveraging the skills at Chrysler was a crucial opportunity. Fiat now has a 58.5% stake in Chrysler. Taken alone Fiat would lose $1.04 billion euros or $1.4 billion in 2012, and would need government aid, even after the turnaround under Marchionne, showing how crucial taking the initiative to make the early investment in Chrysler was to saving Fiat. Sensing this opportunity when first Daimler and then Cerberus private equity failed with Chrysler, taking advantage of the government aid to Chrysler after the 2008 financial crisis, and creating a partnership with the government on issues such as fuel efficiency, may be the biggest achievements of Marchionne and his team of managers. Sensing the opportunity to get geographical diversification by taking on Chrysler separated Fiat from Peugeot Citroen, which lacked this diversification and had to turn to the French government for aid. Taking on the Chrysler venture, sensing the timing and balancing the risk with management knowhow, securing the right kind of deal with the U.S. government to reduce risks in 2008, turning Fiat technology in small cars into a saleable asset, and managing the relationship with the Obama administration, separates Marchionne and his team from a management team that would have seen its role in a purely Italian turnaround which would have not lasted. ...

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Fiat CEO Marchionne's tells Fiat managers to focus on export markets and to look beyond, Italy and the European market. In a presentation to prime minister Mario Monti he emphasizes the capacity utilization at Fiat's Italian plants of 40% in 2012.

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Both Russia and Georgia are faulted for the recent war between the two countries regarding Russian ethnic regions inside Georgia that seek to break away from Georgia.

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Saakashvili, the President of Georgia who was elected in 2004 has spent a lot of time in New York, as a waiter, as a student at Columbia Law School, and was elected at the age of 36, and runs an administration with a lot of 30 year olds. He says he has "American va;ues". HE also ran for election in 2004 on the platform of taking back the two ethnic Russian regions of Abhkazia and South Ossetia. Note also that the mountains near Abkhazi border the region around Sochi where Putin goes for vacation and likes to ski in the mountains and where the winter Olympics are to be held in 2014. He has also had run ins when he has talked to Putin saying he has western support for his position and has met with disdain from Putin. See th link to other articles in the New York Times about Putin's perspective on all this and how the two men share a dislike for one another which may have exacerbated Russia's response still further.

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Markets in Moscow recover and opinion settles down after Russia ends its war in Georgia to support ethnic Russians.