News & Analysis

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

Poland’s planned criteria for assessing the risk of telecoms equipment providers are political and may be aimed at excluding Huawei from developing the country’s 5G network, the Chinese company said on Wednesday. The United States says Huawei’s equipment could be used by the China for spying – an allegation denied by Huawei and Beijing – and has pressed its allies to ban the company. On Tuesday, Poland published a draft cybersecurity law, giving interested parties 14 days to comment. The law says vendors will be divided into four groups depending on their potential threat to Poland’s cybersecurity based on criteria such as whether the supplier might be influenced by a country outside the European Union or NATO, or whether their home country respects human rights, among others.

Romanian aluminium producer Alro Group has received 243 million lei (50 million euros) in state aid to fight the impact of the coronavirus crisis on its operations, the country’s economy, business environment and energy ministry said on Wednesday. The state aid to Alro is part of a 1.4 billion lei support scheme which offers compensation to energy-intensive companies in Romania for indirect emission costs. The scheme was approved by the European Commission in May. Alro was the first company to submit a request for financial support under the scheme but many other companies will also receive aid, the ministry added.

The European Commission has approved an investment of 80 million euros from its Cohesion Fund to build a tunnel and two viaducts as part of a wider scheme to provide a second railway track between the Slovenian port of Koper and the village of Divača in the west of the country. The new line is essential to deal with a growing demand along the route and connect a crucial core network corridor to maritime routes. Commissioner for Cohesion and Reforms Elisa Ferreira said: “This investment is necessary for the improvement of rail connectivity of the Port of Koper, which is a crucial hub for freight and passenger transport with Central Europe.”

Slovenia’s police has stepped up controls on the border with Croatia because of a growing number of migrants trying to enter the country illegally, the country’s ministry of the interior said on Thursday. Control of the border will be tightened until October 18 and a new border regime will be in place in the areas covered by the police departments of Ljubljana, Novo Mesto, Koper, Murska Sobota, Celje and Maribor. The police said that more than 10,000 illegal entries had been recorded in the first eight months of this year, mostly in the areas of Ljubljana, Novo Mesto and Koper, and migrants’ main goal was to reach Italy.

The Hungarian service of Radio Free Europe/Radio Liberty (RFE/RL), closed after the Cold War ended, relaunched this week in response to the country’s steep decline in media freedom. “We are very excited to return to Hungary with state-of-the art programming and RFE/RL’s signature commitment to serving the public interest by reporting the issues that our audiences say matter most,” said RFE/RL acting president Daisy Sindelar. RFE/RL announced its plans for a Hungarian service in autumn 2019 in response to the dramatic constriction of the country’s media landscape reflected in a 16-point plunge, to 89th place, in Reporters Without Borders’ 2020 World Press Freedom Index.

Saudi Arabia-based ACF Renewable Energy, a subsidiary of ACWA Power, on Thursday completed the sale of its 100 per cent stake in ACWA Power CF Karad PV Park, owner of the 60.4 MWp Karadzhalovo photovoltaic (PV) power plant in Bulgaria to Enery Development, an Austrian investor and project developer in the renewable energy sector for an undisclosed consideration. Furthermore, ACWA Power’s subsidiary NOMAC Limited, also completed the sale of its 100 per cent stake in NOMAC Bulgaria, a company providing operations and maintenance services to the ACWA Power Karad plant, to Enery Development for an undisclosed consideration. Both transactions follow the signing of a binding agreement back in December 2019 and constitute the largest brownfield PV deal in Bulgaria to date.

Marko Škop’s sophomore fiction feature, Let There Be Light, has come out on top at the tenth-anniversary edition of the Slovak national film awards. The social family drama, which was picked as Slovakia’s submission for Best International Feature Film at the 92nd Academy Awards, also netted the accolades for Best Director and Best Screenplay, while Zuzana Konečná and Milan Ondrík received the gongs for Best Lead Actress and Actor.

Eastern Europe

Armenia’s GDP in the first half of 2020 dropped by 6.8 per cent compared to the same period in 2019, according to figures released on Wednesday by the country’s National Statistical Committee (NSC). The NSC said that total GDP for the period was just over 2.5 billion drams (around 4.37 billion euros). In 2019, GDP for the first six months of the year was 2.72 trillion drams.

Georgia has banned weddings and other types of public gatherings, and has postponed theatre and cinema openings to contain the spread of Covid-19 as the number of daily infections has risen, the government said on Wednesday. Georgia reported 44 new cases of the virus on Wednesday, bringing its total to 1,773. The country of around 3.7 million people has so far reported 19 deaths, far fewer than other countries in the emerging Europe region. But as case numbers have risen it has now decided to banned weddings, birthdays and other parties as well as funeral dinners, both indoors and in open-air spaces, Natia Mezvrishvili, the government administration head, told a briefing.

Iran will negotiate restitution for the relatives of the victims of a Ukrainian passenger plane accidentally shot down by the Iranian military in January, the head of the national aviation authority told news agency IRNA on Wednesday. Touraj Dehqani Zanganeh said his country was open to paying “full compensation” to the families of the 176 victims based on international regulations.

A prominent Ukrainian church leader who previously said the Covid-19 pandemic was “God’s punishment” for same-sex marriage has tested positive for the virus. Patriarch Filaret, head of the Ukrainian Orthodox Church Kiev Patriarchate, is reportedly stable and undergoing treatment. “His Holiness Patriarch Filaret is especially grateful to everyone who shows his love and support in prayers for his health,” the church said in a statement on Tuesday. The 91-year-old made headlines in March when he told a Ukrainian TV channel that the coronavirus crisis was “God’s punishment for the sins of men, the sinfulness of humanity.”

The development of the international Lapis Lazuli trade route received significant support this week when officials from Azerbaijan, Turkmenistan, and Afghanistan joined an online meeting to discuss the ambitious project. During the video conference, transport officials from the three countries focused on a series of issues, including improvement of the transport and logistics activities along the route, as well as the creation of equal conditions for all participating countries. Officials from the Caspian region and Central Asia reviewed the possibility of imposing through rates — a freight cost that includes pre-carriage, on-carriage, or both, in addition to the main carriage. The parties also agreed to introduce a single price policy along the corridor.

North East Europe

Estonia’s consumer prices decreased for a fifth consecutive month in August, data from Statistics Estonia (SE) showed this week. The consumer price index (CPI) fell 0.9 per cent year-on-year in August, the same as in July. Diesel fuel prices decreased 24.2 per cent year-on-year and petrol prices fell 6.9 per cent. There was also a 14 per cent fall in housing rent and a 7.4 per cent decline in household electricity bills.

Invest Lithuania, the country’s state-funded investment promotion agency, has published a guide for Belarusian businesses seeking to relocate. According to Invest Lithuania, companies that create at least 20 jobs for at least three years can relocate within three working days. Business operations can be set up in less than a month. After protests in Belarus kicked off following the rigged August 9 election, internet outages have left the country’s sprawling IT sector especially vulnerable.

Latvia has formally called for the International Ice Hockey Federation (IIHF) to strip Belarus of its co-hosting rights for the 2021 Men’s World Championship. In a letter to the IIHF, the Latvian Government urged the governing body to replace Belarus amid growing political tension between the two countries. Latvia warned it will “withdraw guarantees for organising the 2021 Ice Hockey World Championship” if the situation in Belarus does not change and the IIHF fails to take “appropriate decisions”. The country had previously threatened to pull out as co-hosts unless the IIHF allowed it to jointly stage the tournament with a nation other than Belarus.

South East Europe

Israeli recognition of Kosovo as an independent country will strain relations with Serbia, despite it being in the framework of agreements the two Balkan countries signed in the White House last week, a source close to Serbian President Aleksandar Vučić told The Jerusalem Post on Wednesday. “Serbia will not move its embassy to Jerusalem if Israel recognises Kosovo as an independent country,” according to the source, who has close knowledge of the agreements signed in Washington. “Moreover, this move by Israel would harm the otherwise intimate relationship between Israel and Serbia and it will never be the same. It’s that simple.”

The three main opposition blocs that won a slender victory in recent parliamentary elections in Montenegro pledged this week not to seek to withdraw recognition of Kosovo or change the country’s national symbols. The new ruling majority will also honor all current international commitments, such as membership of NATO. Zdravko Krivokapic, leader of the pro-Serbian bloc For the Future of Montenegro, Dritan Abazovic, leader of the Black on White coalition and Peace is Our Nation coalition leader Aleksa Becic made the pledges as part of an agreement about the key obligations of the new government.

Businesses in Albania will have better access to finance thanks to a risk-sharing facility signed this week by the European Bank for Reconstruction and Development (EBRD) and Raiffeisen Bank Albania, one of the largest banks in the country. The facility will strengthen Raiffeisen Bank Albania’s capacity to meet the financial needs of selected clients, including corporates and small and medium-sized enterprises (SMEs), while keeping its risk-weighted assets under control. Local banks’ ability to support the growth of successful corporates and SMEs, which are a pillar of the economies in the Western Balkans, is often constrained. The risk-sharing facility, which is also extended to three other Albanian banks, addresses this challenge and also helps participating banks to improve their portfolio’s risk management, risk diversification and capacity to manage more sophisticated risk profiles.

Irish car parts manufacturer Aptiv, formerly Delphi Automotive, plans to launch operations at a manufacturing plant in Zajecar, eastern Serbia, in March next year, the city’s council said this week. The company intends to start the construction of the plant in November and will employ 2,100 people by the end of 2021. In January 2019, Aptiv opened a factory in Leskovac, eastern Serbia, where it produces wiring harnesses for the automotive industry.

Central Asia

Kazakhstan’s government is looking to attract more investment and develop the country’s cryptocurrency mining sector amidst the global economic turmoil caused by the Covid-19 pandemic. Bagdat Musin, who heads Kazakhstan’s digital development, innovation and aerospace industry ministry, is convinced the cryptocurrency sector could attract up to nearly 1.2 billion US dollars in direct investments by 2025. Thirteen cryptocurrency mining farms are currently operational in Kazakhstan, while four more are under development.

Hospitals in Turkmenistan are being inundated with patients showing acute Covid-19 symptoms, despite the country being one of few in the world where no coronavirus cases have been officially registered. Correspondents of RFE/RL in the tightly controlled country said medical personnel at hospitals in the Turkmen capital, Ashgabat, had reported this week that the situation had been worsening over the past month and that the number of fatalities had been on the rise as well.

Kyrgyzstan’s deputy prime minister, Erkin Asradiyev, this week confirmed that the country has so far received 338 million US dollars in aid from various international financial institutions since the beginning of the Covid-19 pandemic. According to the deputy PM, 207 million US dollars have already been spent. “The funds have been sent to different agencies to fight the coronavirus infection, as well as for the purchase of grain, for social payments and wages, and to finance soft loans for business,” said Mr Asrandiyev.

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