News & Analysis

Emerging Europe this week

Central Europe

Poland’s anti-monopoly office UOKiK said on Wednesday it had fined Gazprom over 29 billion zloty (6.47 billion euros) for building the Nord Stream 2 pipeline without the watchdog’s approval. UOKiK has also imposed a 234 million zloty fine on the remaining five companies financing the pipeline, which when complete would double Russia’s gas export capacity via the Baltic Sea. Nord Stream 2 is led by Gazprom, with half of the funding provided by Germany’s Uniper and BASF’s Wintershall unit, Anglo-Dutch company Shell, Austria’s OMV and Engie of France.

The European Parliament turned up the heat on Bulgaria this week as lawmakers passed a resolution that highlights flaws by the EU’s poorest member in respecting the rule of law, combating endemic corruption and supporting media freedom. Thousands of Bulgarians have been rallying daily since July, accusing the prime minister, Boyko Borissov, of eroding democratic rules and allowing corrupt practices that support oligarchs and businesses close to his centre-right GERB party. In a heated debate, lawmakers from the socialist party family, as well as the Greens and liberals slammed Bulgaria’s government for backsliding on democratic values and abuse of EU funds. MEPs from the centre-right group EPP, to which Borissov’s own party belongs, defended Borissov as a pro-European leader.

Hungarian drugmaker Richter has manufactured enough doses of Covid-19 drug Remdesivir to treat 3,000 patients, spokeswoman Zsuzsa Beke said on Wednesday, amid shortages of the medication in Europe. The move comes as the European Union is under pressure to expand its limited stocks of the antiviral drug as Covid-19 cases and hospitalisations rise on the continent. Remdesivir is usually administered to severely ill patients. Last week it was also given to US President Donald Trump after he tested positive for the virus.

Czechia reported 5,335 new coronavirus cases on Thursday, its highest one-day tally since the pandemic started. The rise surpassed a previous record of 4,457 reported the previous day as the country of 10.7 million had Europe’s fastest per-capita spike in cases in the past two weeks. In total, it has recorded almost 100,000 cases since March, along with 829 deaths.

German cement makers HeidelbergCement and Schwenk this week lost their challenge to an EU antitrust veto of their joint bid for the Croatian business of Mexico’s Cemex after Europe’s second-highest court backed the EU decision. The European Commission in its 2017 ruling said the companies’ offer to grant rivals access to a cement terminal in southern Croatia was not sufficient to address competition concerns that the deal would push up cement prices in Croatia. The companies subsequently appealed to the General Court, but the court dismissed their arguments and lawsuit.

Telekom Slovenije has begun rolling out 5G technology for mobile phone users, Slovenia’s biggest telecom operator said on Monday. The company said it aims to cover 33 per cent of the population within the current frequency spectrum by the end of the year. In implementing 5G services, Telekom Slovenije is operating jointly with Sweden’s Ericsson.

Eastern Europe

British oil giant BP is looking to beef up security at its facilities in Azerbaijan after reports of alleged attacks on the Baku-Tbilisi-Ceyhan (BTC) pipeline, the main route for Azeri oil exports, it said on Wednesday. Fighting between ethnic Armenian and Azeri forces over the Nagorno-Karabakh region erupted on Septemeber 27 and has since escalated to its deadliest level since the 1990s. The clashes have not yet affected energy supplies from the region but have put energy markets on edge.

The World Bank has cut its 2020 economic growth forecasts for Georgia, Armenia and Azerbaijan because of the coronavirus crisis but expects the three South Caucasus nations to recover next year. The South Caucasus economy is expected to contract by 4.9 per cent, the World Bank said in its economic update report, citing prolonged pressure from the pandemic and low commodity prices.

Lithuania has blocked 5.8 million euros in payments to Belarus for an EU-funded cross-border development programme, fearing the money could be misused, the Lithuanian government said on Wednesday. The European Union has condemned police crackdowns on protesters in Belarus since a disputed August 9 election, and last week imposed travel bans and asset freezes on dozens of Belarusian officials. Lithuania has been one of the strongest backers of a strong EU stance against President Alexander Lukashenko’s attempts to stifle opposition and is hosting his main opponent, Svetlana Tikhanovskaya, who fled there after the vote.

Meanwhile, the International Olympic Committee (IOC) is investigating claims by Belarus athletes they are being discriminated against because of their political views, IOC President Thomas Bach confirmed on Wednesday. Belarus athletes have repeatedly urged sports bodies including the IOC to suspend the National Olympic Committee’s (NOC) membership. “We are a civil non-governmental organisation and our mandate is limited to sport. We cannot change the laws or the political system or the laws of a sovereign country,” Bach said. “But we are taking very seriously the mandate we have to ensure that the NOCs of any country respect the Olympic charter and that athletes enjoy rights in compliance with the charter.”

Ukraine will abolish import duties next year for wine produced in the European Union as part of its obligations under a trade and association agreement with the bloc, the Ukrainian producers’ association said on Wednesday. Ukraine last year imported wine worth around 147 million US dollars from the EU, producers said. The import duties are currently between 0.3 and 0.4 euros per litre. Ukraine signed a broad political and trade accord with the EU in 2014 which came into force in 2017, marking a historic shift away from Russia.

North East Europe

Russia’s Federal Security Service (FSB) said on Tuesday it had detained a serviceman and his brother in the country’s west for having allegedly passed state secrets to Estonia. A criminal case has been opened for high treason, the FSB said. The serviceman was detained in front of an apartment building in Smolensk, by three masked officers in military fatigues and dragged into a black van, FSB footage carried by Russian news agency TASS showed. The FSB added that the serviceman’s brother, a permanent resident of Estonia, had also been detained in Pskov, a Russian city located close to the border with Estonia.

Shares in Lithuania’s state-owned energy company Ignitis Group fell below their initial public offering (IPO) price on their first day of trading in Vilnius and London on Wednesday. The markets have not been kind to new entrants as high levels of volatility encourage investors to focus on existing holdings or established companies. Shares dropped to as low as 21.65 euros, after opening at 22.70 euros per share. Ignitis Group, which owns Lithuania’s distribution network, power plants and a power and gas trader, was priced at the lower end of its IPO range of 22.50 euros.

Latvia and Estonia recalled their ambassadors from Belarus this week in solidarity with Poland and Lithuania, who were last week ordered by the Belarusian authorities to cut the size of their diplomatic missions in Minsk. “We are doing this out of European solidarity,” said Latvian Foreign Minister Edgars Rinkēvičs, while Estonian Foreign Minister Urmas Reinsalu said that the actions of Belarus towards Lithuania and Poland had been “unjustified and regrettable”.

South East Europe

Serbian President Aleksandar Vučić this week nominated Prime Minister Ana Brnabić to remain in office for another term. An alliance led by Mr Vučić’s won a parliamentary election in June by a landslide, securing 188 deputies in the country’s 250–seat parliament, and the approval of Brnabić’s new cabinet is largely a formality. Ms Brnabić first became PM in 2017, the country’s first female and first openly gay head of government.

Serbia’s government said this week that it had signed a 606 million euros contract for the construction of the Fruskogorski Corridor high-speed road with China Road and Bridge Corporation (CRBC). The 47.7 kilometre-long road will link the towns of Ruma and Novi Sad, in northern Serbia, and will include a new bridge over the Danube river, as well as a 3.5 kilometre-long tunnel under Fruska Gora national park, the government said in a statement on Tuesday. The road will cross the municipalities of Novi Sad, Irig and Ruma, and will be connected to the existing road linking Novi Sad and Zrenjanin to the Romanian border, as well as the future Ruma-Sabac-Loznica motorway.

EU Enlargement Commissioner Oliver Varhelyi said this week that he expects Albania and North Macedonia to formally start their EU accession talks before the end of the year. Presenting the bloc’s annual progress reports at the European Parliament, Mr Varhelyi said that he is “very hopeful” that the first inter-governmental conferences, which would mark the start of the talks, could be convened within the framework of the current German EU presidency.

The senior cleric of Montenegro’s Serbian Orthodox Church, who avoids mask-wearing and called a pilgrimage “God’s vaccine”, has tested positive for coronavirus, his office said on Wednesday. Metropolitan Amfilohije Radovic, 82, who wields big political influence as well as heading the largest Christian denomination, was diagnosed with Covid-19 on Tuesday but felt well after a night in hospital in the capital Podgorica.

Central Asia

Kyrgyzstan’s parliament failed to gather a quorum in an overnight session, deputies said on Thursday, leaving a power vacuum as rival groups seek to claim power after ousting the cabinet. Unrest has gripped the former Soviet republic, which borders China and hosts a Russian military airbase, since thousands of people protesting against the results of a parliamentary election seized government buildings on Tuesday. Three opposition groups have each proposed their candidates for interim prime minister who would need to oversee a repeat vote in the coming months.

Kazakhstan banking and fintech firm Kaspi.kz’s initial public offering on the London Stock Exchange will be priced between 28.50 and 33.75 US dollars, giving it an implied market capitalisation of about 6.5 billion US dollars, a bookrunner said on Thursday. Last month, the company, which controls the third-largest bank in Kazakhstan and operates a payments and e-commerce business, announced its listing plan, a year after it had abandoned the move. The total deal size of the offering will be between 742 million US dollars and 879 million US dollars.

The Covid-19 pandemic continues to have a dire economic impact on Tajikistan, according to a report from the International Monetary Fund (IMF), published this week. “Trade and transport problems have severely impacted economic activity and remittances, with the latter declining by about 15 per cent,” the report notes. IMF economists predict real GDP growth in the country of just one per cent in 2020, but do expect the country’s economic growth to recover in 2021, reaching six per cent.

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