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Emerging Europe this week

Central Europe

Poland and Hungary should ask the European Union’s top court to assess the link between access to EU money and observing the rule of law, instead of blocking the EU’s 2021-2027 budget and recovery plan, the head of the European Commission said this week. The suggestion by Ursula von der Leyen is one of the possible ways EU officials have been discussing informally to end the vetoes of Warsaw and Budapest that are holding up 1.8 trillion euros of EU funds to lift the economy of the 27-nation bloc. Speaking to the European Parliament, Von der Leyen stressed that the EU’s rule that the bloc’s funds can only be sent to governments that observe the rule of law would be applied only to protect EU budget funds.

Romania’s prime minister Ludovic Orban meanwhile has chastised his Hungarian and Polish counterparts for blocking the EU budget and coronavirus recovery fund, warning that their stance threatens economic assistance that the continent sorely needs. “Saying that you don’t agree to the [budget] package because you don’t agree to the connection between rule of law and using European funds is not supportable, because all EU countries should respect the rule of law,” Mr Orban told the Financial Times.

Bulgaria said on Wednesday it would close schools, restaurants, shopping malls and gyms until December 21 as it struggles to contain a surge in new coronavirus infections. The restrictions, which will start late on Friday, are aimed at preventing a strained health system from being overwhelmed and at halting the spread of infections in the country. “Only one thing has been proven to have an impact on Covid-19 – decreasing social contacts or quarantine. To ease the pressure on hospitals that are on the brink, we are introducing measures for three weeks,” Prime Minister Boyko Borissov said.

Hungary has no need to issue more foreign currency bonds until at least the beginning of 2023 and plans to place no debt in foreign currency, Finance Minster Mihaly Varga told the daily Vilaggazdasag in an interview published on Wednesday. Hungary placed 2.5 billion euros of debt in international markets this month, allowing safe debt financing, even as a row with the European Union about blocking the EU’s 2021-2027 budget roiled markets. “With the 2.5 billion euros placement in November we now have to issue no new FX debt until early 2023,” Varga said. “We can await economic developments and make decisions from a calmer position.”

Bulgaria will increase its minimum monthly wage to 650 leva (333 euros) from January 1, 2021, a 6.6 per cent increase. The country’s government said this week that the new wage will contribute to reducing in-work poverty, bridging the gap in income distribution, increasing purchasing power and consumption of the lowest-income groups on the labour market.

Tesco, the UK’s biggest retailer, has drawn accusations of racial profiling and fuelling discrimination after displaying anti-shoplifting signs in Romanian. The development came to light this week after a Romanian woman in the UK shared an image of the posters in a Tesco supermarket on social media. The signs at Tesco’s Telford branch, in the English Midlands, warned would-be Romanian thieves of prosecution. They were used in 2019 and produced by the local West Mercia police department. “We’re sorry if these posters caused any offence – they have now been removed,” Tesco responded in a statement.

Eastern Europe

Authorities in Belarus said on Tuesday that opposition politician Viktor Babaryko — who until his arrest had intended to run against President Alexander Lukashenko in August’s rigged election — had been charged with corruption and money laundering. “The KGB investigations directorate has completed the preliminary investigation into the criminal case against top executives of Belgazprombank,” the Belarusian KGB, said in a statement on Tuesday. Babaryko — who was head of Belgazprombank bank before entering politics — is accused of receiving bribes and “laundering funds obtained by criminal means,” the statement added. Mr Babaryko, who has been in jail since June, claims the charges are politically motivated.

Baku is investigating alleged war crimes committed by Armenian and Azerbaijani forces during six weeks of fighting over the disputed Nagorno-Karabakh region, the country’s prosecutor general said on Wednesday. Azerbaijan and Armenia have traded accusations of war crimes in fierce fighting that erupted in Karabakh in late September, reigniting their simmering conflict for the control of the Armenian-populated region of Azerbaijan. Videos circulated on social media during the fighting that allegedly showed executions of Armenian prisoners of war by Azerbaijani troops and Armenian soldiers defiling the bodies of Azerbaijani servicemen.

The Ukrainian economy is facing disaster, according to Mikhail Saakashvili, the former president of Georgia and current head of the Ukrainian Reform Council. “The Ukrainian economy is now heading for a big catastrophe. A very strong budget crisis is looming, and Ukraine will have problems with payments of salaries and pensions starting from next year,” he said this week. Saakashvili said that while money from the International Monetary Fund would help in the short term, Kyiv will soon struggle. Ukraine signed a five billion-US dollar deal with the IMF on June 9, due to be drawn down over 18 months. Thus far, Kyiv has received 2.1 billion US dollars.

The European Bank for Reconstruction and Development (EBRD) and the European Union are providing new finance to small and medium-sized enterprises (SMEs) in Moldova. A 17.5 million euros loan to Moldova Agroindbank will offer much-needed access to finance to this critical business segment. The funds are part of the EU4Business-EBRD credit line and will help companies to invest in modern production equipment and technologies to meet EU standards in terms of product quality, health and safety measures and environmental preservation. Following these investments, companies will be able to offer high-quality products on the local market and benefit from trade opportunities with the European market.

North East Europe

Lithuania’s parliament on Tuesday conservative Ingrida Šimonytė as the Baltic country’s next prime minister before shutting down for a week because of a recent Covid-19 spike in the country. Šimonytė, 46, will head a three-party centre-right coalition after winning a vote of confidence in the 141-seat legislature, the Seimas. A former finance minister and presidential candidate, Šimonytė led her conservative Homeland Union to victory at the parliamentary elections in October.

Ingrida Šimonytė (centre).

Estonian President Kersti Kaljulaid appointed a new education minister on Wednesday following the resignation of Mailis Reps, who reportedly used a ministry driver and government car to drop off and pick up her six children from school. The new minister, Jaak Aab, was previously minister of public administration.

Work began this week on the construction of a Rail Baltica Central Hub in Riga, Latvia. The hub is one of the key construction phases of Rail Baltica, a greenfield rail transport infrastructure project that seeks to connect the Baltic States to the European rail network. The work includes the reconstruction of Riga railway station, construction of a railway bridge across the River Daugava, and installation of European standard-gauge tracks.

South East Europe

Construction of the so-called Peace Highway in the Western Balkans moved a step closer towards beginning this week thanks to a loan of up to 85 million euros from the European Bank for Reconstruction and Development (EBRD). The loan will finance the construction of a 39-km section between the cities Niš and Pločnik in the south of Serbia. The highway will connect Niš with Kosovo’s capital Prishtina, continue to Albania’s capital Tirana and end in Durrës on the Adriatic Sea. The road has been classified as an extension of the Trans-European Transport Network (Orient/East Mediterranean corridor) and is a part of Route 7 of the Western Balkans core network. The construction of the Peace Highway in Serbia is co-financed with a 100 million euros loan by the European Investment Bank, while the European Union is providing a 40.6 million euros investment grant as well as funding for project preparation through the Western Balkans Investment Framework.

Prosecutors in The Hague have demanded that the trials of former Kosovo President Hashim Thaçi and three co-defendants accused of war crimes in Kosovo and Albania during the 1998-1999 war in Serbia’s former province, start next summer or “in September at the latest.” In its submission to the pre-trial judge Nicolas Guillou, the chief prosecutor Jack Smith requested the court to dismiss as unfounded the demand by the defence lawyers who asked that the trials should not begin before June 2022, or even by January 2023.

Russian Helicopters this week made its first European delivery of its Ansat light twin model, to the ministry of the interior of the Republika Srpska in Bosnia and Herzegovina. Three air ambulance-configured helicopters were delivered, with more to follow in 2021 and 2022. “This delivery testifies that Ansat is competitive on the European market, and we see potential for new orders,” said Russian Helicopters director general Andrey Boginsky.

The German government plans to set up a 58.2 million euros fund to foster Albania’s economic development over the next two years, the German embassy in Tirana said on Tuesday. The commitment includes joint projects to improve water network infrastructure, as well as support for EU accession negotiations in chapters covering the economy, German ambassador to Albania Peter Zingraf said in a statement posted on Facebook. “We encourage Albania to consistently pursue the reform path towards the EU, especially judicial reform and the fight against organised crime and corruption,” Zingraf added.

Central Asia

Kazakhstan is borrowing 1.8 billion US dollars from development banks to help it cope with the fallout of the Covid-19 pandemic. The country’s lower house of parliament, the Majilis, on November 24 approved agreements to borrow more than one billion US dollars from the Philippines-based Asian Development Bank and another 800 million US dollars from the Beijing-based Asian Infrastructure Investment Bank. Finance Minister Yerulan Zhamaubayev told lawmakers that the funds would be set aside for treating coronavirus patients, covering the cost of supplementary payments to frontline medics and generating employment through support for small and medium enterprises.

The agriculture ministry in Kyrgyzstan has introduced a temporary ban on the export of livestock to avoid a surge in meat prices on the local market as the economy reels from the Covid-19 crisis. Explaining the reasoning behind the ban, which came into effect on November 20, Agriculture Minister Tilek Toktogaziyev said that shortages of beef caused by the high level of exports have led to a 25 per cent increase in prices from 330 som (4.70 US dollars) per kilogram at the start of the year to about 500 som (5.90 US dollars).

Uzbekistan’s first national census since independence from the Soviet Union has been pushed back a year owing to the size of the task and the potentially lingering threat of the coronavirus. The census, the first time Uzbeks would have been counted since 1989, was set to be carried out in 2022 after trial runs in late 2021. It now has been postponed to 2023. President Shavkat Mirziyoyev signed a law in March that requires a national census take place at least every 10 years.

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