Middle East & Balkans News Brief – 28 June 2011


News Summary

MIDDLE EAST

Tripoli (Libya). The International Criminal Court has issued a warrant for the arrest of Libyan dictator Muammar Gaddafi for crimes against humanity and attacks on civilians during the popular uprising against his regime going on since February. The ICC in The Hague has also issued arrest warrants for two other top figures in the Gaddafi regime – his son Saif al-Islam and intelligence chief Abdullah al-Sanussi. This is the second time in the ICC’s nine-year history that it has issued an arrest warrant for a sitting head of state after in 2009 the ICC issued an arrest warrant for Sudanese President Omar al-Bashir, which is yet to be enforced.

BALKANS

Sofia (Bulgaria), Bucharest (Romania). EU heads of state and government adopted a political decision to reform the Schengen passport-free travel area at the conclusion of a two-day summit in Brussels (24 June). Asked by EurActiv to comment, Dutch Prime Minister Mark Rutte likened the monitoring scheme to that imposed on Bulgaria and Romania when they joined the European Union in 2007. That scheme is called the ‘Cooperation and Verification Mechanism’ (CVM).

“In the future, all countries will be evaluated against the new system,” Rutte said, adding that this was “the good news”. “In the future you don’t need to go to CVM-type procedures, while on Bulgaria and Romania we have an existing type of procedure, which we will orderly follow,” he said.

Referring to the ninth CVM report, due next month, on the progress made by Romania and Bulgaria under the monitoring mechanism, Rutte has made it clear that his country doesn’t think that the two newcomers have met the Schengen accession criteria yet. He also made clear that despite the position of the European Parliament, his country considers the CVM and Schengen accession to be directly linked.

Athens (Greece), Sofia (Bulgaria). Bulgaria’s Novinite.com quotes billionaire investor George Soros as predicting that the eventual exit of a member state from the Euro Zone is probably inevitable. “There was no arrangement for any country leaving the Euro, which in the current circumstances is probably inevitable,” he was quoted as saying at a panel discussion in Vienna. Soros pointed out that the Euro had a basic flaw from the start in that the currency was not backed by political union or a joint treasury. He warned that Europe is on the verge of an economic collapse that would start in Greece, but spread to other countries. According to him, the financial system remains extremely vulnerable.

“Let’s face it: we are on the verge of an economic collapse which starts, let’s say, in Greece but could easily spread. The financial system remains extremely vulnerable…”We are on the edge of collapse and that is the time to recognize the need for change,” Soros said.

Athens (Greece). Organizers of an international flotilla to Gaza say Israel is pressuring Greece to halt the ships’ departure. American activist Ann Wright told a news conference on 27 June  that Israel is mounting a “tremendous diplomatic offensive” to prevent the flotilla from setting sail. Organizers urged the Greek government not to succumb to Israel’s pressure.” Organizer Vangelis Pissias said the flotilla is ready to leave in a few days, but gave no specific departure date. Just over a year ago, a similar mission ended with the deaths of nine Turkish activists in clashes with Israeli naval commandos who intercepted them.  This year Turkey’s IHH said it would send 20 activists but pulled out its two ships.

Greece has traditionally close ties with the Palestinians and Arab nations, but has recently boosted ties with Israel, keen to gain more overseas investment to offset its financial crisis. The two countries are in preliminary talks on potential energy deals involving newly discovered Israeli offshore natural gas deposits that include fields near Gaza.

Greece says it opposes the Gaza blockade but has urged Greek citizens and Greek-registered vessels not to take part in the flotilla, noting the risk of violence. The Greek Coast Guard has said it is taking steps to ensure the safety of crews and passengers of vessels involved in the flotilla, including “intensive searches.”

Sofia (Bulgaria). The Summer Forecast of Ernst & Young outlines that sovereign debt concerns overshadow modest Euro Zone recovery. “These particularly relate to increased turbulence on European sovereign debt markets, with a restructuring of Greek sovereign debt looking increasingly likely. Unless this is handled well by the European authorities, then the repercussions for the EU could be severe. An uncoordinated Greek debt restructuring could lead to a considerable tightening of credit provision throughout the Euro Zone, with the impact in Bulgaria being felt both via increased stress in its banking sector and via reduced demand for its exports,” Ernst & Young warns.

А further negative impact for Bulgaria could be a severe delay in the recovery of FDI. Bulgaria’s FDI inflows plunged from 30% of GDP in 2007 to just 4.5% of GDP in 2010, and there was a small net outflow in Q1 2011. The forecast points out it is unlikely that Bulgaria’s FDI inflows will approach pre-crisis levels again for some time. Further tightening following an uncoordinated Greek debt restructuring would delay any recovery of FDI, in turn holding back the recovery in Bulgaria.

Ernst & Young’s GDP forecast for Bulgaria is 3.2% in 2011, 4.8% in 2012 and 5.6% in 2013. The report of the global consultancy reminds that Bulgaria was hit hard by the crisis in 2009, with GDP contracting by 5.6%, and despite initial hopes the economy grew only 0.3% in 2010, “a very weak recovery.” It says that the disappointing result last year was in large part due to a steep 3.2% decline in GDP in Q4 2009 – quarterly growth actually averaged 0.9% in 2010. However, GDP rose just 0.5% in Q1 2011, lower than the 2010 average, due to very weak private and public consumption, although exports continued to rise strongly with quarterly growth of 4.6%.

Sofia (Bulgaria) Bulgaria’s economy recovery will slow down over the next few months due to difficulties in recovery from the recession and gloomy global prospects, analysts from the Italian UniCredit bank, which owns the Bulgarian Bulbank, forecast. The Bulgarian economy is expected to grow by a real 3.3% next year from 2.8% a year earlier according to the bank’s quarterly report on the countries from Central and Eastern Europe. Inflation however is likely to remain one of the biggest problems for Bulgaria. Inflation will soar to an annual 6% in June and July because of a spike in food and fuel prices, only to ease down to 4% by the end of the year, the report says.

(Middle East & Balkans News, 28 June 2011)

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About Johann Brandstätter

Photojournalist and documentary photographer based in Bulgaria, working mainly in the Balkans and the Middle East. Conflicts & crises, social and environmental issues, defense & military, travel, transportation.
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