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Tuesday, 2 August 2011
Politics and others:
- The Supreme Military Council’s meeting in Ankara shows signs of tension
- A promising turn in the dispute between the Greek cabbies and the government;
- The “Indignants” protest the removal of their tents in central Athens;
- Greece tightens safety measures against terror attacks;
- “Barricades will remain in Kosovo!” Serbian Minister Goran Bogdanovic says;
- The US commends Belgrade’s commitment to peaceful dialogue with Kosovo;
- EU mediator Robert Cooper acts as a proxy between Pristina and Belgrade;
- Unidentified attackers break windows of an Islamic Center in Novi Sad;
- Bulgarian trade unions voice a demand for higher wages
- TUSAID forecasts 7.4% inflation and growth of 6% by the end of the year
- Turkey’s Privatisation Agency alleviates terms under the 3rd tender for the natural gas grid in Ankara;
- EU relieves troubled economies’ access to development funds
- Serbia’s JAT national carrier on tender
- IMF: Romania’s economy recovers
- EBRD lowers Bulgaria’s economic forecast to 2.3%;
- Bulgaria will appeal the court’s decision in favor of Lukoil
- Russia denies allegations that the claim against Bulgaria’s National Electricity Company will be withdrawn
- Russia’s CB remains the sole bidder for Bulgaria’s tobacco holding
BALKANS – POLITICS & OTHER
The Supreme Military Council’s meeting in Ankara shows signs of tension
The Turkish Prime Minister opened the yearly Supreme Military Council, or YAŞ’s meeting on 1 August, and sent a distinct message that the government has assumed more power after the resignations of top militaries. A report of Hurryiet suggests that there are issues to be overcome mainly concerning the promotion of some low-ranking military officers to key positions. The meeting held between Prime Minister Recep Tayyip Erdoğan and acting Chief of General Staff Gen. Necdet Özel has been interpreted as a sign of ongoing problems. As YAŞ convened for its four-day gathering, Erdoğan sat alone at the head of the table, breaking custom for the annual meetings.
Sources said the change in protocol was because Özel, the army’s head commander, was serving as the acting chief of General Staff and his appointment was yet to be concluded during the high-level meeting.
The image, however, was seen by many as a symbol of Erdoğan’s full control over the military after former Chief of General Staff Gen. Işık Koşaner and the land, naval and air forces commanders resigned from their posts late last week.
A promising turn in the dispute between the Greek cabbies and the government
There was a chink of light in the dispute between taxi drivers and the government over the liberalization of their sector but not enough to end the cabbies’ strike, reports Kathimerini on 1 August. Transport Minister Yiannis Ragousis said that he would apply limits on the number of licenses that will be issued based on population statistics. However, he added that he would not be ready to unveil detailed proposals until the end of the month.
This response was not enough for the cabbies, who said that the will continue their protests. This will include a picket of the Transport Ministry on Mesogeion Avenue for at least the next 48 hours. Taxi owners and drivers are not opposing the opening up of their profession per se but are asking for a limit to be set on the number of licenses that will be issued. They want the ceiling to be linked to the population of each city as well as factors such as whether it is a tourist destinations, as the government had set out in its initial proposals. Some cabbies have also suggested that they should be compensated for the high cost of licenses that they recently bought from other drivers. The government has flatly rejected this option.
The “Indignants” protest the removal of their tents in central Athens
Protesters who gathered in Syntagma Square from the end of May to display their opposition to the handling of the economic crisis are to march to City Hall in Athens on 1 August, Kathimerini wrote.
The so-called Indignant announced their intention to protest authorities’s decision to remove dozens of tents and banners from the square over the weekend.
Greece tightens safety measures against terror attacks
Greek police says security checks have been increased at Muslim prayer house and other immigrant sites following the July 22 massacre in Norway.
Greece has conditions that may make it ripe for an extreme-right rise: an economy on the verge of collapse and unwanted status as Europe’s No. 1 gateway for illegal immigration. It has suffered a spate of hate attacks by far-right groups, Kathimerini reports. Last November, the leader of a neo-Nazi group won a seat on Athens’ city council, with an unprecedented 5.3 percent of the vote.
“Barricades will remain in Kosovo!” Serbian Minister Goran Bogdanovic says
Serbian Minister for Kosovo-Metohija Goran Bogdanovic has told Tanjug that the barricades on the roads in northern Kosovo will stay where they are until the problem of the Jarinje and Brnjak administrative crossings is solved. After a meeting with representatives of local Serbs in Zvecan, northern Kosovo, Bogdanovic urged peace and confirmed that he is scheduled to meet with EU mediator Robert Cooper in Raska, south-central Serbia.
Bogdanovic and Head of Belgrade’s negotiating team in the talks with Pristina Borislav Stefanovic have arrived at the barricades in Rudare, municipality of Zvecan. The meeting between Bogdanovic and Stefanovic and Serb representatives in northern Kosovo in Zvecan began at 11 a.m. and ended around 2 p.m. on 1 August. The talks were led behind closed doors, and the meeting was also attended by head of Kosovska Mitrovica district Radenko Nedeljkovic and mayors of northern Kosovo municipalities.
A great number of Serbs gathered around the main barricade in Zupce after KFOR removed one smaller barricade from Kosovska Mitrovica-Ribaric road.
Standing some 100 metres away from the barricades, KFOR members kept watch over the situation and the gathering of Serbs to the place where priests of the Serbian Orthodox Church served communion for peace in Kosovo-Metohija.
KFOR released that its members removed several smaller barricades in this part of Kosovo on 31 July and 1 August, which were put up on roads toward neighbouring Albanian villages and were not surrounded by local citizens.
The Serbian Red Cross on Monday sent humanitarian aid consisting of food and personal hygiene products to Kosovo. The Kosovo Red Cross will distribute the aid.
Two Red Cross trucks loaded with goods needed by the people in northern Kosovo were allowed to enter Kosovo at the Jarinje checkpoint on 1 August. KFOR soldiers only stopped the trucks to inspect the load and let them enter shortly after that.
The US commends Belgrade’s commitment to peaceful dialogue with Kosovo
The United States welcomes Serbia’s commitment to resolving the current challenges in Kosovo and Metohija through peaceful means, and calls for the soonest possible continuation of the Belgrade-Pristina dialogue, Tanjug learned from the U.S. Embassy on 1 August.
The U.S. Embassy welcomes President (Boris) Tadic’s and the Serbian parliament’s condemnation of violence and their stated commitment to resolving the current challenges in north Kosovo through peaceful means, Tanjug reports.
EU mediator Robert Cooper acts as a proxy between Pristina and Belgrade
EU mediator Robert Cooper was to met with Serbian officials to discuss the recent unrest in Serb-majority nothern Kosovo, local media reported. Cooper has on his agenda a meeting with Serbia’s Minister for Kosovo Goran Bogdanovic and Belgrade’s top negotiator Borko Stefanovic in Raska, a few kilometres (miles) from the border with Kosovo, the Beta news agency reports. The European Union already urged both sides last week to “show maximum restraint” to avoid further escalation after NATO troops stepped in when a border post in Kosovo was set on fire and bulldozed, apparently by ethnic Serbs. Cooper is also set to meet Kosovo officials but it was not clear if that meeting would also be on 1 August. On the ground NATO forces reportedon 1 August that they had removed three road blocks in northern Kosovo to allow access to one of the two border crossings that are at the centre of a trade dispute.
Novi Sad (Serbia)
Unidentified attackers break windows of an Islamic Center in Novi Sad
Police said in a release that unknown attackers smashed windows on the premises of an Islamic center in Novi Sad early on 1 August. The center is under the control of the Meshihat of the Islamic Community in Serbia, which is headed by Mufti Muamer Zukorlic. The incident took place at about 3.30 a.m., Tanjug reported.
The attackers smashed the glass on the entrance door and another window of the Islamic community building, said the Novi Sad police. The Novi Sad police department is putting its full effort in finding the offenders and clarifying the circumstances of the event that has been qualified by a competent prosecutor as violent behavior, the release said.
Local Muslim religious leader Mirza Murati told Tanjug that the attack did not cause much material damage but was seen by the community as an “act of vandalism and attack on all Muslims,” since it occurred at the start of the holy month of Ramadan.
Bulgarian trade unions voice a demand for higher wages
At the end of June, the Bulgarian government decided to increase the minimum monthly wage in Bulgaria from EUR 122 to BGN 138 as of 1 September.
The cost of living of a member of a four-member household in June 2011, are up by 7% compared to June 2010 according to data of the Confederation of Independent Trade Unions in Bulgaria (CITUB), cited by Novinite. The inflation, under these conditions, will reach 8-9% in December; the June inflation on annual basis is 3.5% compared to the EU average of 3%, CITUB stated. The June, the poverty line is EUR 100, up 7.2% compared to June, 2010, while income per household is down by 2.1% in the first quarter of 2011, compared to the same period of 2010.
CITUB data further shows stagnation on the labor market – the average monthly wage for the first quarter of 2011 is EUR 343 – up 3.7% on annual basis. While production in several sectors is increasing, there is no increase in the wages or the number of employed, and the trade unions will request higher salaries in those and other sectors. For instance, one of the industries will be coal mining in which production is up 13% in the first quarter of 2011 while the number of workers there is down 1.7% and wages are down 0.8%
TUSAID forecasts 7.4% inflation and growth of 6% by the end of the year
The Turkish Industry and Business Association Chief forecasts 2011 growth of Turkish economy to 6 percent of GDP, consumer inflation of 7.4 %. The group also predicts that that the dollar will be worth 1.62 Turkish Liras by year’s end, while the bond interest rate would be around 8.7 percent by the end of 2011.
Turkey’s Privatisation Agency alleviates terms under the 3rd tender for the natural gas grid in Ankara
Turkey’s Privatization Board has eased the payment requirements for the potential bidders to a third tender for the natural gas grid in Ankara and its operational units in six surrounding cities, Anatolia news agency reported. Bidders will have the option to pay 50 percent of the amount in advance and the rest can be paid over installments in a two-year period for 80 percent stake in the Başkent gas grid privatization tender, which will be repeated for the third time in the last four years.
The past two tenders, which starting in 2008, were not completed successfully because the winners’ were experiencing payment difficulties. This year, the plan to ease the payment requirements with installments targets “attracting potential foreign investors” to the gas grid tender, while both Russia and Poland are coincidentally undergoing important privatizations at the same time, according to the report.
Başkent Doğalgaz, the country’s second largest gas distribution company, operates a network of 8,300 kilometers and sold 2.1 billion cubic meters of gas last year, distributing natural gas to 1.2 million homes.
After officially making the third tender public last week of July, the Privatization Agency implemented a series of changes to ease payments for the gas grid this time, according to Anatolia News Agency. The deadline for the bidding is Oct. 31 this year.
EU relieves troubled economies’ access to development funds
The European Union plans to make it easier for its six most troubled economies to access billions of euros in development funds by lowering the amount of money they have to contribute to projects, Kathimerini newspaper writes.
1 August’s proposals would see the EU’s part of the financing of infrastructure and education projects rise to up to 95 percent for Greece, Ireland, Portugal, Romania, Latvia and Hungary.
Traditionally, states have to cover between 15 percent and 50 percent of the costs, a requirement that has kept weak economies from using the funds designated to them.
The new proposals won’t increase the overall amount of money these countries will receive from the EU, but are supposed to make sure a smaller number of growth-enhancing projects actually gets off the ground. European Commission President Jose Manuel Barroso called the proposals “a kind of ‘Marshall Plan’ for economic recovery,” designed to “boost prosperity and competitiveness.”
All six countries affected by the proposals have had to seek emergency loans in recent years as investors worried about their economic stability, although Hungary has since been able to regain market access. The rescue programs for Greece, Ireland and Portugal in particular have come under fire for demanding huge spending cuts and painful economic reforms that have further depressed economic growth. Raising the co-financing rate to 95 percent would give the six countries an extra €2.9 billion ($4 billion) in EU funds in the short term. That money would be drawn from a total fund worth €91 billion through 2013, according to figures provided by the European Commission.
But if easier co-financing rules succeed in getting projects going quickly, they could unlock a much larger sum. So far, only about €23 billion of the total fund have been paid out.
Serbia’s JAT national carrier on tender
Serbia’s infrastructure ministry launched a tender for an investor in a joint venture to set up a new airline to replace heavily-indebted national carrier JAT. The tender, published on the ministerial website, is open to airlines “providing services of commercial air transport or a financial investor whose investment portfolio includes a minimum of 5% of air transport industry”. Candidates can bid individually or as a consortium.
The Serbian authorities insist that candidates must have transported over 1,5 million passengers in 2010 and have a consolidated balance sheet for the same year over EUR 200M (US$ 288M). The deadline for applications was set at September 30. Serbia has already tried twice in the last two years to sell its ailing national carrier, but no willing buyers have come forward. The government decided in April 2010 to create a new company to replace JAT.
Serbian state secretary for air transport Miodrag Miljkovic was quoted in the media recently as saying part of JAT’s assets will pass on to the new company while the rest will be used to repay the JAT’s heavy debts. In 2009, JAT recorded a 23.5 million-euro loss and put its debts at 146 million euros. Figures for 2010 have not yet been released but JAT officials have said they do not expect a profit. JAT’s trouble started when the international community placed economic sanctions on Serb-dominated rump Yugoslavia for the bloody wars that tore apart the former Yugoslav federation in the 1990s. Since December 2009, several low cost airlines started operating from Belgrade which led to a further decline in JAT’s sales.
IMF: Romania’s economy recovers
Romania’s economy is recovering and on track for solid growth in 2012 but authorities must continue efforts to cut back public spending and reform state-owned enterprises according to IMF.The upward trend will continue in 2012, when growth should range between 3.5 and 4.0 percent. IMF said after completion of a 10-day review of the Romanian economy that all targets set under the precautionary-type agreement signed in March with the IMF and the European Union had been met. The IMF could disburse a EUR 480M installment of its EUR 3.5B credit line to Romania soon after the board meeting, if needed. But authorities have repeatedly said that they did not intend to draw any money and would only use this deal as an insurance policy.
Romania has pledged to trim the public deficit to 4.4 percent in 2011 from 6.5 percent in 2010. Hard hit by the economic crisis, the Balkan country last year slashed public-sector wages by 25 percent and increased the VAT tax on goods and services from 19 to 24 percent.
The IMF representative also said that Romania had to reform the health-care system and privatize or restructure loss-making state-owned enterprises, to reduce pressure on public spending.
Cyprus to seek an international bailout according to Bank of Cyprus
Cyprus may soon have to seek an international bailout, becoming the fourth state in the eurozone to request a rescue if it does not take urgent action to repair its finances, the island’s largest commercial bank revealed on 1 August.
“With our inaction we are risking the ability of refinancing the state and the consequences will be immediate and serious,” Bank of Cyprus said in a statement, cited by Kathimerini newspaper.
There is an imminent threat of Cyprus joining the European Union support mechanism, with whatever drawbacks that will entail. Since the euro zone’s sovereign debt crisis erupted last year, the EU and the International Monetary Fund have announced multi-year bailouts of Greece, Ireland and Portugal totalling EUR 382B (US$ 550B).
A rescue of Cyprus, which accounts for only about 0.2 percent of the 17-nation euro zone’s economy and is expected to have gross financing needs of no more than several billion euros this year, would not strain Europe’s financial resources. But it would be an unwelcome reminder of how the region’s debt crisis can spread as problems in one country affect other states. All three major credit rating agencies have downgraded
Cyprus in the last several months because its banks are sitting on an estimated 5 billion euros in Greek sovereign debt and its economy is heavily exposed to Greece through trade.
On 29July, Standard & Poor’s downgraded the island again by one notch to BBB+ and warned that another cut was possible, citing the government’s inconsistent commitments to spending cuts as well as exposure to Greece.
Cyprus received more bad news on 1 August when the central government deficit widened sharply in the first half of this year to 3.47 percent of gross domestic product on a cash basis, from 1.87 percent a year ago. Revenue fell 1.42 percent while expenditure was 9.15 percent higher.
Authorities have said they are aiming for a general government public deficit, which also includes accounts for local governments and some semi-governmental corporations, of 4.0 percent of GDP or less for 2011, after a 2010 shortfall of 5.3 percent.
But that forecast was made before the July 11 blast caused energy shortages and slapped the state with a bill which, according to opposition parties, could reach 3 billion euros.
EBRD lowers Bulgaria’s economic forecast to 2.3%
The European bank for Reconstruction and Development (EBRD) has lowered its annual economic growth forecast for Bulgaria from 3.1% to 2.3% in 2011.
Bulgaria emerged from recession last year but the pace of recovery in the first half of 2011 seems to be slowing slightly. Year-on-year industrial production growth has dropped since the first quarter though it remains robust at 9.4% in June according to the report of EBRD, cited by Novinite. Its previous forecast, back in May, predicted a 4.6% growth rate. The 2012 forecast was unchanged at 4.4%.
According to the International Monetary Fund’s forecast Bulgaria’s economy will grow 3% at the end of 2011, below the 3.6% growth projected by the Bulgarian government in its 2011 budget.
The EBRD operates in the Balkans, Turkey, Central and Eastern Europe, former Soviet countries and Central Asia. In its Regional Economic Prospects report, it said the area’s 29 economies should grow by 4.8% this year.
Bulgaria will appeal the court’s decision in favor of Lukoil
The Administrative Court of City of Sofia has blocked the decision of the Bulgarian Customs Agency to strip Bulgaria’s only fuel refinery Lukoil – Nefrtochim of its license.
“I have been informed by Customs Agency Director Vanyo Tanov that he will lodge an appeal before a second instance court in relation with Lukoil license,” Bulgarian Prime Minister Boyko Borisov told Focus News Agency.
“Meanwhile, we will continue the actions to make the refinery comply with legislative requirements. Everything necessary will be made to install measuring devices. In this way both investors and society will be calm,” he said further.
Borisov refused to comment Monday’s ruling of Sofia Administrative Court to overturn the customs office decision to strip Lukoil local plant of its fuel depot licenses.
Russia denies allegations that the claim against Bulgaria’s National Electricity Company will be withdrawn
Russia’s state nuclear company Atomstroyexport has no intentions of withdrawing its claim against Bulgaria’s National Electric Company, NEK, over the Belene Nuclear Power Plant Project, Bulgaria’s Novinite writes.
The news was reported 1 August by the Russian news agency Rossbalt, citing Russian energy sector officials. Two weeks ago, Atomstroyexport took Bulgaria’s NEK to an arbitration court for EUR 58 M over delayed payments for its work on two nuclear reactors.
The next day the Bulgarian company said it is ready to strike back with a EUR 61 M counter claim against Atomstroyexport over delayed payments for purchases of old equipment for the plant, worth about EUR 300 M.
In a Bulgarian National Radio interview, Bulgaria’s Economy and Energy Minister, Traycho Traykov hinted that Russia would withdraw its claim against Bulgaria over the delayed payment under Belene Nuclear Power Plant. The Minister further informed he had given the Russian side an ultimatum to withdraw the claim by Monday, August 1, otherwise the Bulgarian company will lodge a counter-claim should Russia persevere.
“Atomstroyexport” say they were baffled by Traykov’s ultimatum.
“The Bulgarian side is fully aware this claim is far away from being the last one,” Rossbalt’s source has commented, cited by Novinite.
Russia’s CB remains the sole bidder for Bulgaria’s tobacco holding
As reported earlier, British American Tobacco, the only top-notch investor among the companies, which were expected to bid for Bulgaria’s majority stake in cigarette maker Bulgartabac, has withdrawn from the tender.
The news comes a week after Austria-based CB Family Office Service abandoned the sale, leaving Austria-registered BT Invest, behind which stands Russia’s second-biggest bank VTB, the only bidder for Bulgarian tobacco monopoly, Novinite reported.
A majority stake – 79,83% – in Bulgaria’s state cigarette producer Bulgartabac Holding, whose management has been harshly criticized in recent years, was put on sale on April 26 after years of procrastination.
The long-delayed procedure was officially given the go-ahead by the agency for privatization and post-privatization control through an announcement in the State Gazette on May 10.
The consultant for the Bulgartabac sale, Citigroup Global Markets Ltd, was picked by the Bulgarian government in February 2010.
Two of the less profitable plants of Bulgartabac holding – in the cities of Plovdiv and Stara Zagora – were sold in 2009 through the Sofia Stock Exchange – for BGN 31 M and BGN 18 M respectively.
The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.
(Mariela Zamfirova, MBA; 2 August 2011)