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Tuesday, 5 July, 2011
The purpose of the newsletter is to provide the latest news in the Balkans region in an objective, balanced and multiple-perspective way. All sources are quoted for the sake of convenience of the readers. By reading the newsletter you’ll learn in less than half an hour all regional top-headlines in politics and economy.
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Coverage: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Kosovo, Macedonia, Montenegro, Romania, Serbia, Turkey
Timing: 8:30 am CEST every day Mon to Fri
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- Turkey’s Deputy Prime Minister Cemil Çiçek was elected as new speaker of Parliament;
- Serbian President Boris Tadic on an official visit to Bosnia and Herzegovina;
- The agreement between Belgrade and Pristina is not to be ratified by the governments of the two countries; Austrian Vice Chancellor and Foreign Minister Michael Spindelegger interprets the agreement as the first positive step for Serbia’s and Kosovo’s future;
- Two soldiers were shot dead in Turkey’s mainly Kurdish southeast in an attack believed to be the work of Kurdish rebels;
- VMRO-DPMNE’s will form a new government as a coalition with Albanian Democratic Union for Integration by 8 July; The Organisation for Security and Cooperation in Europe (OSCE) raised its concerns over the state of the media in Macedonia;
- Bulgaria’s Prime Minister Boyko Borisov is happy with the stance of BSP and DPS that insist on the resignation of the government; Bulgaria merges its local and presidential elections that will be held on 23 October, 2011;
- Bulgaria plans to shift its arms exports to markets in the European Union and NATO, after decades concentrating on Asia and Africa
- Turkey has claimed the top spot in economic growth worldwide for the 1Q 2011 with 11%;
- Rampant fears over Greece’s default continue after passage of the austerity package by the Parliament in Athens. Brows are raised by the question over other EU countries’ indebtedness;
- Greece’s privatization program envisages sale of assets from the national gas company DEPA and national pipeline operator DESFA;
- Romania’s credit rating raised to BBB- by Fitch;
- Macedonian A1 TV channel will be put up for sale for EUR 25M;
- Only three out of the ten candidate-bidders for Bulgaria’s Bulgartabak Holding will continue in the race for the last biggest enterprise to be privatized: British American Tobacco (BAT) and Austrian-registered companies BT Invest and CB Family Office Services;
- Bulgaria’s Parliament passed Finance Minister Simeon Dyankov’s proposal for a 2% limit to the budget deficit, as well as a 40% limit of GDP for redistribution; Bulgaria eleven-month deficit amounts to EUR 305.6M (US$429.4M) or (0.8% of the projected 2011 GDP) on cash basis, while the fiscal reserve increased slightly in May to EUR 1.6B (US$3.6B).
- The fiscal policy of Prime Minister Boyko Borissov’s center-right GERB Cabinet leads to a prolonging the period of depression in Bulgaria’s economy, former Minister of Finance Plamen Oresharski comments.
BALKANS – POLITICS
Deputy Prime Minister Cemil Çiçek was elected as new speaker of Parliament in legislative elections following three rounds of voting, Тurkey’s Hürriyet Daily News wrote. Responding to questions from the media after Çiçek’s election, Prime Minister Recep Tayyip Erdoğan informed they could fulfill their promise to draft a new constitution if they reached a consensus with the Nationalist Movement Party , or MHP. Erdoğan also stressed his wish the Тurkish Republican Party or CHP to be involved in the work on a new constitution as the main opposition party, but added that they were on the wrong path.All CHP Members of Parliament, including party leader Kemal Kılıçdaroğlu, joined Parliament for the election,but remained seated in silence without voting. CHP protests authorities’ decision not to release party members elected to parliament
Sarajevo (Bosnia and Herzegovina).
Serbian President Boris Tadic departs on an official visit to Bosnia and Herzegovina on 6 July, local Beta news agency reports. This is Tadic’s first visit to Sarajevo and he will meet with the members of the Presidency of Bosnia and Herzegovina – Nebojsa Radmanovic, Bakir Izetbegovic and Zeljko Komsic as well as with parliament and government officials.
The agreement reached by the negotiating teams of Belgrade and Pristina is not to be ratified by the governments of the two countries, Serbia’s Vecernie Novosti newspaper writes. The heads of the negotiating teams have to submit a detailed report in the talks to ministers and Members of Parliament during the next phase that is scheduled for this month.
According to Serbian Politika newspaper, the Serbs in Kosovo have different interpretation of the agreement depending on whether they live in the North or South parts of Kosovo. The agreement was signed on 1 July by representatives of Belgrade and Pristina Borislav Stefanovic and Ediota Tahiri in Brussels. Most of the polemics over the clauses of the agreement is related to the use of registrations and individual documents.
Austrian Vice Chancellor and Foreign Minister Michael Spindelegger has welcomed the deal Belgrade and Pristina have cut, Serbian Blic newspaper writes.
“The agreement is the first and a good step towards the two countries’ future and it will affect Serbia’s EURpean integration positively,” said Spindelegger. According to Austria’s first diplomat the deal aims at giving Kosovo’s residents an opportunity to travel across Serbia.
Two soldiers were shot dead in Turkey’s mainly Kurdish southeast in an attack believed to be the work of Kurdish rebels, security sources said, cited by AFP. The soldiers, wearing civilian clothes, came under fire while walking on the main street of Yuksekova town, a hotbed of Kurdish militancy in the province of Hakkari, which borders Iran and Iraq, the sources said. The outlawed Kurdistan Workers’ Party (PKK), fighting for Kurdish self-rule in the southeast, was believed to be behind the attack.
In a separate development, an explosion hit a military vehicle on a road in the outskirts of the capital Ankara, but there were no casualties, Anatolia news agency reported. A small bomb designed to make loud noise rather than kill was likely to have caused the blast, Ankara police chief Zeki Catalkaya said, according to Anatolia. There was no immediate word about the perpetrators. The PKK has targeted military vehicles in the past.
Tensions between Ankara and the restive Kurdish community have mounted in the wake of the June 12 elections after the authorities refused to release six Kurdish activists elected to parliament while awaiting trial in prison and stripped one of them of his seat.
Later that month, the PKK set tough conditions for Ankara for the extension of a unilateral truce it had declared in August last year. The group demanded that Prime Minister Recep Tayyip Erdogan publicly announce an end to military operations against its militants, and that parliament officially invite jailed PKK leader Abdullah Ocalan to negotiations to resolve the Kurdish conflict. The PKK, listed as a terrorist group by Ankara and much of the international community, took up arms in 1984, sparking a conflict that has claimed some 45,000 lives.
VMRO-DPMNE’s (Democratic Party for Macedonian National Unity) leader Nikola Gruevski is expected to submit the list of ministers in the new Cabinet by 8 July. The new government will be formed as a coalition between VMRO-DPMNE and Albanian Democratic Union for Integration (DUI). The leaders of the two parties, Nikola Gruevski and Ali Ahmeti, have agreed to divide the ministerial posts 2:1 in favor of VMRO-DPMNE, which means the new Macedonian government will have more Albanian ministers who will manage more significant portfolios. According to the agreement Ali Ahmeti’s party gets EURpean integration portfolio, which will reportedly be managed by Ermira Mehmeti.
The Organisation for Security and Cooperation in EURpe(OSCE) raised its concerns over the state of the media in Macedonia, Free Europe radio reports. The media in question are owned by Plus Production – Spic, Vreme, and Koha E Re newspapers that are endangered with termination due to unpaid taxes.
Journalists in Macedonia protest on 4 July, the local newspaper Vecer writes.The daily says that about 150 journalists will lose their job and the number rises every day.Journalists in Macedonia face threats and lower salaries and fees. Three Macedonian newspapers known for their criticism of Prime Minister Nikola Gruevski published their last issues on 1 July as they are being shut down for alleged tax violations. Opposition-minded newspapers Spic, Vreme, and Koha E Re (in Albanian language) have terminated publication forcing about 100 journalists in unpaid leave after their publishing firm Plus Produkcja had a distraint placed on its bank accounts for allegedly owing EUR 1 M in tax. The company’s owner, Velija Ramkovski, a local oligarch, has been in jail since 2010 on counts of financial and tax crimes.
Poland is not to take any additional commitments to resolve the dispute between Macedonia and Greece, Macedonia’s Citel TV channel reports. According to the media, the real situation and the quiet diplomacy of Poland that presides EU’s Council now, cool down Macedonia’s hopes that Skopje will get this year a date for pre-accession talks.
The former Yugoslav republics start sharing up the diplomatic property of Socialist Federal Republic of Yugoslavia (SFRY), Macedonian Vecer daily writes. The talks about the separation have been underway for years, but now they are close to completion. In August Serbia grants Croatia its embassy in Vienna, thus putting an end to the first stage of the process. Croatia takes two apartments in Trieste, while Slovenia gets a residence in Rome and consulates in Klagenfurt and Milan. Bosnia and Herzegovina receives a residence in Budapest and a house in Washington. Macedonia takes a consulate in Athens and an embassy in Canberra, Australia.
Bulgaria’s Prime Minister Boyko Borisov stated that he is really happy with Bulgarian Socialist Party (BSP) and Movement for Rights and Freedom (MRF) insist on the resignation of the government.
Commenting on statements made by the opposition Prime Minister Boyko Borisov told Focus News Agency: “I’m really happy with the fact that the Bulgarian Socialist Party (BSP) and the Movement for Rights and Freedom (ethnic-Turkish DPS) want the resignation of our government, because this corresponds to all allegations they spread for backdoor talks”. These allegations were released by their obliging media, Boyko Borisov said.
Bulgaria is going to save about EUR 4 M by opting to hold the upcoming presidential and local elections together, according to Finance Minister Simeon Dyankov. EUR 13 M are intended under the 2011 State Budget Act for the holding of the double vote in the fall of 2011. Individual elections (i.e. only presidential or only local) in the past have cost about EUR 8 -9 M. On 23 October, 2011, all eligible Bulgarian voters will vote for a head of the largely ceremonial Presidency, municipal mayors, and municipal councilors. Potential run-offs for the Presidency and mayor seats will be held two weeks later. Bulgaria holds presidential elections every 5 years, and local elections – every 4 years; as both were supposed to be held in the fall of 2011, the Cabinet and Parliament decided to hold them together to save money.
Bulgaria plans to shift its arms exports to markets in the European Union and NATO, after decades concentrating on Asia and Africa, according to a new defence strategy presented on 5 July, AFP reported. Currently, arms exports to EU and NATO countries do not exceed 10 percent of Bulgaria’s annual defence sales abroad – which stand at about EUR 126M (US$177M) reads the document, which was drafted jointly by the economy and defence ministries.The strategy has yet to be approved by the government over the next few months.
Under communism, Bulgaria’s arms and munitions industry employed 115,000 people and shipped abroad some EUR 569M (US$ 800M) worth of production. But the collapse of communism, the disbanding of the Warsaw Pact defence treaty, and a number of international arms sales embargoes to countries in Africa and the Arab world plunged the once booming industry into a deep crisis in the 1990s.The majority of production facilities were privatised but failure to attract foreign investors put them in the hands of small local buyers with limited potential for new investments. An industry source told AFP that Bulgaria still managed to preserve some of its markets in the Middle East, India and Algeria.
The new strategy will aim to keep these traditional arms export partners by forming joint ventures and common research and development projects. Another major goal was to encourage the Bulgarian army to buy more local defence equipment by developing it to become fully compatible with NATO standards and also engage in collective alliance defence projects from 2018 onwards.Bulgaria’s defence industry currently employs some 15,000 people and makes up 0.5 percent of the general industry share in the country’s gross domestic product, according to the document.
Special Feature: Glimpse into Turkey’s Economy
With private investments and domestic consumption leading the charge, Turkey claimed the top spot in economic growth worldwide for the 1Q 2011 with an impressive 11%, according to the Turkish Statistics Institute, or TurkStat. At this rate Turkey will surpass EUR 528 B ($US742 B), its pre-crisis 2008 level of gross domestic product, by the end of the year, Premier Recep Tayyip Erdoğan said during a meeting with his Justice ruling party’s, parliamentary group. Turkey led the world in first-quarter growth this year, posting an astounding rate of 11 % thanks mainly to private investments and consumption, according to data revealed by the Turkish Statistics Institute, or TurkStat.
Turkey’s headline inflation fell by 1.43 percent in June compared with a month earlier, mainly due to an apparent drop in food prices, according to data published by the Turkish Statistics Institute, or TurkStat. The Central Bank forecasted year-end inflation at 6.9 percent. The fall in the consumer price index was considerably below market expectations of 0.75 percent on average. Meanwhile, yearly inflation dropped to 6.24 percent in June from 7.17 percent in May, according to TurkStat data.
Lira decline supports Turkish exports. Turkey’s export performance in June was much better compared to last year, but as the surge in imports is much faster, the figures do not represent much hope for a dangerously high foreign trade deficit.According to preliminary figures released by the Turkish Exporters’ Assembly, or TİM, on Friday, exports in June totaled EUR 8.2B ($US11.5B), rising 25.2 percent compared to June 2010. The 12-month rolling exports have surpassed EUR 88.9B (US$ 124.9B), posting an annual increase of 14.4 percent. The export champion sector was once again automotive, with EUR 1.3B (US$ 1.8B) in monthly foreign sales. Textiles, with EUR 1.05B (US$ 1.48B) in exports, and chemicals, with EUR 1.04B (US$ 1.46B) of exports, followed. Turkey’s trade deficit in May surged to EUR 7.13B (US$ 10.1B), exceeding all estimates. As of April, the annual current account deficit stands at EUR 45.13B (US$ 63.4B).
Recently the Greek Parliament approved EUR 28B (US$ 39.34B) worth of austerity cuts and privatization amid massive and violent popular protests against the package. Euro zone finance ministers agreed to grant Greece a fifth loan from a total EU/IMF package worth EUR 110B (US$154.5B) after Greek lawmakers approved more austerity measures, and the IMF is expected to follow suit on 8 July. However, uncertainty remains about whether the bailout issued by the EU and IMF will be enough for Greece to continue servicing its massive EUR350B (US$492B) debt. Fears that Greece might default on its loans are still rampant, as is the general level of mistrust at the country”s public and private finances. Greek authorities are arguing they will need a second bailout, amounting about to the same sum as the current EUR 110B (US$154.5B) loan. At the same time, the Polish government, which took up the rotational presidency of the EU, has voiced worries about the nature of the financial aid issued by the Union.
“Those programs must be clearly seen as a step for economic recovery of the given country. This does not apply fully to the EU plans, so their philosophy must be changed,” stated Polish Minister of Finance Jacek Rostowski. Minister Rostowski has argued that the rescue plans must have clear components contributing to the countrie”s economic growth and not only target servicing of debt. Elsewhere in the EU, worries remain about the financial systems and economies in countries such as Ireland, Portugal, Spain and even Italy, which have seen massive growth in debt.
Germany will contribute EUR 5.05B (US$ 7.3B) to a fifth slice of aid for Greece provided by the European Union and International Monetary Fund, a press report said, quoted by AFP. “By mid July, Greece is to receive EUR 12B (US$16.9B) in loans, including EUR 5.05B (US$ 7.1B) in German credits,” German’s Bild newspaper said, without identifying its source. Payment is to be made by the state-owned bank KfW in response to a request from the government, the newspaper added. Berlin will thus provide more than half of the EU’s share, which amounts to EUR 8.7B (US$ 12.24B), while the IMF is to lend Athens another EUR 3.3 B (US$4.64 B).
Greece’s privatization program envisages sale of assets from the national gas company DEPA and national pipeline operator DESFA, RBC Newspaper reports. The offer might attract Gazprom’s attention. However, the European Commission is not likely to allow Gazprom to purchase stocks. As an EU member, Greece has laws banning gas production companies from controlling the entire chain from a field to consumers, it comments.
Romania had its credit rating raised to investment grade by Fitch Ratings for the first time in almost three years after the government. Romania”s sovereign rating was raised one step to BBB-, the lowest investment grade, with a stable outlook, Fitch said today in a statement from London, as cited by Bloomberg. Moody’s Investors Service also gives Romania comparable Baa, while Standard & Poor”s rates the country”s debt BB+, its highest speculative grade. “The upgrade reflects Romania”s progress in recovering from the effects of the financial crisis,” including a return to economic growth, narrowing the current-account deficit and reducing the budget deficit, Ed Parker, a director in Fitch”s emerging-market sovereign group, is quoted as saying. Romania”s GDP grew by 1.7% in the first quarter from a year earlier, ending a two-year contraction, as demand for exports increased. Romania, which received two international bailouts after 2009, plans to trim its budget deficit to less than 3% of GDP in 2012 from 6.5% in 2010.
Macedonian television station A1 needs a new owner, the local newspaper Utrinski Vesnik reports. According to the daily the television has been put up for sale for EUR 25M (US$ 35.12M), a sum the media needs to pay off its debt of EUR 9,5M (US$13.35M) to the Revenue Department. The reports about the A1 sale emerged after the announcement that the television changes its program scheme, because its journalists have been sent on a compulsory leave. A1 owner Velija Ramkovski is under arrest for frauds and tax evasion.
Only three out of the ten candidate-bidders for Bulgaria’s Bulgartabak Holiding will continue in the race for the last biggest enterprise to be privatized. These are British American Tobacco (BAT) and Austrian-registered companies BT Invest and CB Family Office Services, which have placed initial offers to take part in the privatisation of Bulgaria’s tobacco group Bulgartabac. Originally, 10 companies had purchased tender documents for the sale of the state-owned 79.83 % stake in the tobacco group. As part of the deal, the future buyer will also gain control over Bulgartabac’s cigarette factories in Sofia and Blagoevgrad, as well as its tobacco processing company Pleven BT. The Privatisation Agency is expected to certify by 25 July whether the bids put in by the three companies meet the tender criteria. As a next step, the OK-ed candidates will be invited to put in binding bids by 29 August.
Plvovdiv-based King’s Tobacco, Japan Tobacco International, South Korean КТ&G Corp, Philip Morris and USA-based Science Capital Management, which earlier bought tender paper for the privatisation, have dropped out of the race for the asset.
Three of the past procedure (year 2002) candidate – bidders, legal companies, Kambourov & Associates and Djingov, Guginski, Kyutchkov &Velichkov are no longer competing as well as Science Capital Management Co.
Bulgarian Posts and three more companies will be taken put of the slate of enterprises whose privatization has been banned. This became clear after a meeting of Bulgarian Parliament’s Committee on Economic Policy, Energy and Tourism. The other three companies are the Agency on Diplomatic Real Estates (ADIS), Orpheus Audiovideo and the Military Publishing House. The proposal comes from Boyko Borissov’s Cabinet and has created vehement criticism on the part of the left-wing Members of Parliemant.
Russia has committed p Bulgaria find potential shareholders for the project company that will build and operate the Belene nuclear power station, Novinite.com cited Atomstroyexport, the Russian contractor for the plant. The news came three days after Atomstroyexport and Bulgaria’s state-owned power utility NEK agreed to delay until 30 September the negotiations on the plant’s construction and its price. According to Atomstroyexport, despite the three-month delay, Russia will continue discussions on the project, although Bulgaria’s Economy, Energy and Tourism Minister Traycho Traykov had said that Sofia would seek to freeze talks on Belene during the period. A stake of 51 % in the plant will be controlled by NEK, while the remainder will be owned by Atomstroyexport’s parent company – Rosatom unless other shareholders can be found.
The average incomes of Bulgarians will surpass those of Romanians in two years, Bulgaria”s Finance Minister Simeon Dyankov said in an interview with private bTV channel. Dyankov commented that the Bulgarian GDP per capita expressed in Purchasing Power Standards is 43% of the EU average, while Romania”s is just 2% higher, according to Eurostat. In 2009, Bulgaria’s GDP per capita expressed in PPS was a mere 37% of the EU average. According to the International Monetary Fund, the Romania’s GDP per capita in 2010 was EUR 5,205 (US$ 7,319), while Bulgaria”s was EUR 4,372 (US$ 6,147).
End of June Bulgaria’s Parliament passed the so-called State Budget Structure Act, connected to the so-called Financial Stability Pact, which is engineered by Finance Minister Dyankov. The newly passed amendments include enshrining a 2% limit to the budget deficit, as well as a 40% of GDP limit for redistribution. Finance Minister Simeon Dyankov believes that the Financial Stability Pact that will be his legacy to next governments will ensure recovery and stable growth for the country.
Bulgaria’s state budget registered a monthly deficit of EUR 23M (US$32.3M) in May 2011, according to latest data of the Finance Ministry.The new monthly deficit comes after in April the Bulgarian budget enjoyed a surplus of EUR 97.2M (US$136.5M), which, however, was due to the annual contribution of the Bulgarian National Bank to it.Thus, in the first four months of 2011, Bulgaria”s Consolidated Fiscal Program (including the national budget and the balance of foreign aid such as EU funds) registered a deficit of EUR 305.6M (US$429.4M) or (0.8% of the projected 2011 GDP) on cash basis, including a deficit of EUR 230.4M (us$323.9M) of the national budget, and a deficit in EU transactions of EUR 75.1M (US$105.6M). Bulgaria”s fiscal reserve amounted to EUR 1.6B (US$3.6B) as of May 2011, according to the Finance Ministry, marking its first increase in months.
The fiscal policy of Prime Minister Boyko Borissov’s center-right GERB Cabinet (GERB, Citizens for European Development of Bulgaria Party) leads to a prolonging the period of depression in Bulgaria’s economy, according to former Minister of Finance Plamen Oresharski. “The collectibility of revenue has visibly dropped, excessive budget deficits above 3% of GDP were realized, the fiscal reserve shrunk with some EUR 1.5B (US$ 2.11B), while state debt has grown with another EUR 500K (US$ 703K),” said the ex-Finance Minister and present Bulgarian Socialist Party MP.He also snubbed present Minister of Finance Simeon Dyankov early ambition to join the Euro, describing his 2009 priorities as “naive absolutisation of the idea of joining ERM-II against all odds.” Oresharski also criticised the delayed payment of arrears which not only proves harmful to the economy, but also allows for warping of budget accounting.
(Mariela Zamfirova, 5 July 2011)