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Emerging Europe this week

The situation in Belarus remains the biggest story in emerging Europe: you can find all of our coverage here.

Central Europe

Bulgaria’s Justice Minister Danail Kirilov tendered his resignation on Wednesday, amid criticism of his efforts to stem corruption. Prime Minister Boyko Borissov, under pressure to quit himself, must now decide whether to accept Kirilov’s resignation, which is unlikely to quash street protests that have been taking place daily since July, seeking the ousting of Borissov and Chief Prosecutor Ivan Geshev over their perceived failure to combat high-level graft.

Iveco has started work on an assembly plant in the southern Romanian town of Petresti, the Romanian government said on Tuesday. The 9,000 square metre factory will have a production capacity of about 440 trucks per year. “This is an investment worth approximately 50 million euro, that will create, in the first phase, 200 direct jobs and numerous other indirect jobs through all contracts with domestic suppliers,” said Prime Minister Ludovic Orban. In January, Iveco said that it will supply Romania’s armed forces with 942 trucks, the first batch under a framework agreement for the delivery of more than 2,900 high mobility trucks.

Meanwhile, the Romanian government will face a vote of no-confidence on August 31, tabled by the opposition socialists, the PSD. While the PSD is the largest party in Romania’s parliament it does not have enough votes to pass the no-confidence on its own, and will the require the support of smaller opposition parties.

Hungary’s forint traded at two-month lows on Thursday and has now lost more than seven per cent of its value against the euro this year. The worst-performing currency in Central Europe, the forint has been under fierce pressure from dismal Hungarian GDP data, high inflation and loose monetary policy.

Poland could phase out coal as early as 2035 under a “business as usual scenario,” according to Greenpeace, which this week published an analysis of the Polish government plans to restructure the country’s energy sector. Under the plans, coal power plants would be placed under the authority of the National Energy Security Agency (NABE), with a view to closing them down by 2040. However, Greenpeace argues that most of these power plants already have closure dates in place and that Poland could phase out coal by 2035 in a Business as Usual scenario driven purely by economics. “It is clear that without new lifelines and subsidies, coal is at a dead end even in Poland,” said Joanna Flisowska from Greenpeace Poland.

Animals at Warsaw Zoo in Poland are being given cannabis extract as part of a programme to investigate whether it can reduce anxiety. The first to receive the experimental treatment are the elephants. The study aims to assess the impact of cannabidiol (CBD) oil – the active ingredient of which is a chemical derived from cannabis plants – on the moods of different animals. Elephants were chosen as the first subjects because they are prone to stress but also easy to monitor. “We know what each of our elephants eat, how they behave, if they show any behavioural disturbances, what their position is in the group,” says Agnieszka Czujkowska, a veterinary doctor and the head of the zoo’s animal rehabilitation department

The Czech capital Prague has been ranked among the world’s best cities to own a dog in a new global roundup of the world’s most dog-friendly cities by Berlin-based insurance start-up Coya. Comparing 50 major cities around the world, the ranking assessed scores across three major indices that included categories comparing each city’s dog-relevant infrastructure, costs, and ownership regulations. San Francisco was deemed to be the world’s best city for dogs in the final assessment, followed by Seattle and Tel Aviv, with the Czech capital following closely behind in fourth.

Eastern Europe

Ukraine on Wednesday imposed a temporary ban on most foreigners from entering the country until September 28 and extended lockdown measures until the end of October to contain a recent spike in coronavirus cases. Speaking at a televised cabinet meeting, Prime Minister Denys Shmygal also said the government would ban major public events. “The rise in coronavirus infections we have seen in recent weeks is forcing us to act more decisively,” Shmygal said.

Moldova extended a state of healthcare emergency – first introduced on May 15 – until September 15 due to the worsening coronavirus epidemiological situation, the government announced on Wednesday. Restrictions regarding the organisation of mass events and activities involving elderly people will remain in place, the government said. People are not allowed to go out in public in groups of more than three and the elderly should avoid any unnecessary outdoor activity. Face masks are compulsory in public transport, shops and in any public indoor space.

The Green Climate Fund Board this week approved 10 million US dollars for a project on rural green growth and forest resilience focused on 207 rural communities in Armenia. Activities range from provision of energy-efficient fuel-wood stoves – expected to reduce wood consumption by 30 per cent and reduce energy poverty in forest areas – to a broad tree-planting programme that will also increase the forest cover of the country increasing carbon removals from forests by at least seven per cent.

Trade between Azerbaijan and neighbouring Turkey increased during the first seven months of the year, reaching 2.5 billion US dollars, up from 2.3 billion US dollars in the same period of last year. The increase is a sign of increasingly close ties between the two countries. Only Italy – which buys much of its oil from Baku – did more business with Azerbaijan: 3.17 billion US dollars. Azerbaijan’s total trade volume for the seven-month period reach 15 billion US dollars, of which exports – the majority of which was oil – accounted for 9.1 billion US dollars.

North East Europe

A US judge on Monday dismissed a lawsuit accusing Denmark’s Danske Bank and four former top executives of defrauding shareholders by hiding and failing to stop widespread money laundering at its former Estonian branch. US District Judge Valerie Caproni in Manhattan said shareholders in the proposed class action failed to sufficiently plead that the bank improperly reported revenue derived from money laundering or downplayed its supervision failures. They plaintiffs sued four months after Danske revealed in September 2018 that an internal probe had uncovered about 200 billion euros of payments made from 2007 to 2015 through its Estonian branch, with many appearing suspicious.

Despite high unemployment figures, Lithuania’s labour market is in a better shape than in many European countries, according to the country’s social security minister. Lithuania’s employment service reported this week that the official unemployment rate was 13.3 per cent, the highest level so far this year. However, employment is actually growing following the lifting of the coronavirus lockdown in June, said Social Security and Labour Minister Linas Kukuraitis.

Latvian airline airBaltic reported a 62 per cent drop in revenue during the first six months of this year, at 82.5 million euros. The number of passengers carried by the airline decreased by 64 per cent, while the number of flights it operated was 58 per cent on the same period of 2019. “We started this year on a solid basis, continuing sustainable growth both in January and February, but the sector experienced the biggest crisis in aviation history over the following months. As a result, airBaltic was forced to stop flights for 62 days, and overall demand decreased significantly,” said Martin Gauss, executive director of airBaltic.

South East Europe

Montenegro votes in a parliamentary election on Sunday (August 30), with the ruling Democratic Party of Socialists (DPS) expected to once again emerge as the largest party. However, according to the latest opinion polls support for the party is at an all-time low of roughly 35 per cent, meaning that it could require the support of a number of smaller parties to form a new government. This would weaken the grip on power of both the party and its ally, President Milo Đukanović.

In a surprise move, Serbia on Thursday joined the European Union in its rejection of the election results in Belarus and criticism of a crackdown against those protesting against the country’s longtime autocratic leader. Serbia’s prime minister, Ana Brnabić, said that Belgrade had signed up with the EU resolution on Belarus in order to align the Balkan country’s policies with those of the bloc it formally wants to join.

Nearly 10,000 bottles of Serbia’s beloved fruit brandy – known as rakija – will be used to disinfect a hospital in central city of Krusevac, the local Red Cross said Monday. The bottles of Viljamovka, a variety of the drink made from pear, have been sitting in a state depot since 2005 after failing an inspection. Under the Red Cross initiative, they will be processed into 70 per cent alcohol to provide extra disinfectant for the hospital during the coronavirus pandemic, said Emina Todorovic, the organisation’s local secretary.

Prosecutors have urged UN judges to uphold former Bosnian Serb military chief Ratko Mladic’s genocide conviction, saying he personally oversaw the 1995 Srebrenica massacre of some 8,000 Muslim men and boys. Mladic, 78, is appealing against his 2017 conviction and life sentence by a tribunal in The Hague for genocide and crimes against humanity throughout the 1992-1995 Bosnian war. Judges are not expected to deliver a verdict on the appeal until the spring of 2021.

Central Asia

The Asian Development Bank (ADB) plans to provide 323 million US dollars in grants to Tajikistan from 2021–2023 to help address the country’s development needs, according to the bank’s updated Country Operations Business Plan. In addition, 5.25 million US dollars is planned as technical assistance for knowledge and project preparation over the same period. The 2021–2023 plan includes projects to improve food security and water resource management, and develop urban infrastructure and the energy sector. ADB also plans to support projects focused on developing the health sector, improving the financial sector, developing tourism, enhancing disaster resilience, and further improving the road sector. In addition, the plan includes projects that will promote e-governance and improve science, technology, engineering, and mathematics education.

Credit rating agency Fitch this week affirmed Kazakhstan’s Long-Term Foreign-Currency Issuer Default Rating at ‘BBB’ with a stable outlook. Despite the impact on the country’s economy from fluctuating oil prices and the Covid-19 epidemic, Fitch stated that Kazakhstan has managed to maintain a low level of public debt, allowing for the creation of fiscal buffers that can cushion the country from external shocks.

A unit of French independent power producer Total Eren has requested debt financing of up to 32 million euros from the European Bank for Reconstruction and Development (EBRD) for the construction of a 100 MW solar park in Uzbekistan. Total Eren plans to build and operate the 100 MW photovoltaic park in the Samarkand region of southeastern Uzbekistan. The overall investment required to implement the project is estimated at 104 million euros. When it first announced plans for the project last September, Total Eren said it expects to bring the solar farm online in the first quarter of 2021.

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