EU-DIGEST

Obama Ends a 'Special Relationship'(with Eastern Europe - by Judy Dempsey

With Barack Obama in the White House, the deployment of the missile shield in Eastern Europe is no longer a given, as defense experts question its costs, its effectiveness and even its location. As a result, the certainties of the Bush era have given way to a sense of betrayal — but maybe also realism — on the part of the East Europeans. Throughout the Bush administration, the East Europeans had supported the U.S. war on terrorism. They had broken ranks with many other European Union countries in supporting the invasion of Iraq by sending troops. They had turned a blind eye to renditions and interrogation centers (though there were also West European countries that did that).Note EU-Digest: This is a pragmatic and intelligent move by the Obama Administration. As we have often commented in EU-Digest, the Bush Administration did the EU a disservice in having a special relationship with the Eastern European members of the EU, because it created instability within the Union, specifically as it related to the EU ties with Russia.

Labels: Eastern Europe, EU, Missile Defence, US

Eastern Europe Shows Green Shoots as Germany Recovers - by Zoltan Simon

East Europe’s economies, most of which endured record output declines last quarter, look poised to start recovering from recession in the second half as key export markets in western Europe return to growth. Industrial production contracted at a slower pace in Hungary, the Czech Republic, Romania, Latvia, Lithuania and Slovakia in June, helping the Slovak and Czech economies to grow last quarter from the first three months of the year.

Eastern Europe’s export-reliant economies need a western European recovery to revive their manufacturing sectors and spur job growth. After Germany and France exited their recessions last quarter, prospects have brightened for a resurgence of demand that might help the region’s emerging economies expand. “We see a good chance that the economic decline has already bottomed out in the region,” said Laszlo Bencsik, Chief Financial Officer at OTP Bank Nyrt., the Hungarian lender with units in Bulgaria, Croatia, Montenegro, Romania, Russia, Serbia, Slovakia and Ukraine.

Labels: Eastern Europe, EU

Golf - Eastern Europe's golf revolution

Golf was considered a sport of the capitalist elite and banned in Eastern Europe under the rule of communist regimes -- but in the 20 years since the Berlin Wall has fallen there has been a renaissance of the game in the region. With rising disposable income and an increasing interest in leisure pursuits, a growing number of courses, more television coverage and availability of EU funds, the future of the industry in Eastern Europe is bright. Bulgaria is one country where the sport is on the up. Eight years ago there were no golf courses but --to fulfil the increasing domestic demand and as a means to attract tourists to the region -- the country could be set for a boom in golf development. Kancho Stoychev, vice president of Bulgarian Golf, believes that despite there being only 200 registered players in a country whose population is eight million there is set to be an explosion of interest in the sport.

Labels: Eastern Europe, EU, Golf

Downturn May Spur EU Budget Reform - "and provide a more critical look at Eastern Europe's member States" - by Balint Szanko

So tangled can European Union politics be that even some of the more federally minded chancelleries of Europe are surely thinking this as they survey the destruction the recession is wreaking on the Continent's political economy. In these thoroughly dramatic times few remember the hysteria surrounding the negotiations for the EU's 2007-2013 budget. Always difficult, these were so tortuous that some commentators were predicting the union would sink into irrelevance or might even split if no agreement were found. Agreement was duly negotiated with the proviso, demanded mainly by the United Kingdom, Sweden, and the Netherlands—the hard core of a band of fiscal conservatives in the European Council—that the entire system be reviewed in 2008-2009.

In mortal fear of Ireland that is holding the entire EU and its constitutional development hostage, Brussels is skirting the matter. The European Commission was due to make its proposal for the review of the EU's financing early this year. Wary of upsetting people before the ratification of the Lisbon Treaty is finally concluded, the review was delayed until at least the end of this year. The point of all this is that the delay is a godsend for those countries, like most Central and Eastern European members, who make a lot of money out of the EU budget. The deterioration of public finances driven by the economic crisis is so severe in Europe, not least in those states that finance the EU, that the community budget might be in for a drastic overhaul. The later this comes the better, they might be thinking, because in a couple of years the economy will pick up and there might be more money again to blow on things like the common agricultural policy. Last time around the easterners were mostly for conserving the regional development and agriculture support payments. Understandably, they wanted to milk the EU. Next time it may be a bit different. Successful little economies like Slovakia and the Czech Republic may become net payers into the budget, causing them to look at things through different eyes. Slovenia is already there, and the Slovenes now also have a strong stake in the stability of the euro. Slower movers, like Poland and Hungary, are going to have to be clever. Almost certainly, there is going to be less money. The huge redistributionist programs might be trimmed, perhaps seriously. Only a fool would suggest that these countries should give them up – there is too much money in them. But they will have to make a clear choice if they want to preserve some of their benefits. Stubbornly protecting the money pot will not work. And for those who believe in revamping what is a hugely inefficient and not very clever EU budget, that may be no bad thing, anyway. Setting real priorities for regional development spending, half of which is still geared toward the rich western members, might be a good place to start.

Labels: Eastern Europe, EU, EU Budget Reform

EU tones down commitment to Eastern Europe - by Bruno Waterfield

Internal divisions within Europe worked to Russia's advantage ahead of the EU "Eastern Partnership" summit with Ukraine, Belarus, Moldova, Armenia, Azerbaijan and Georgia. Political fears in key European governments, led by Berlin, has undermined the initiative to forge a new pact with former Soviet states and to counter a newly assertive Russia.

During talks in Brussels on Wednesday night, Germany and Holland forced changes to the Eastern Partnership summit communiqué because they feared fueling domestic popular opposition against future EU enlargement. The term "European countries", to refer to the six former Soviet countries, was dropped from draft texts to avoid any hint that it would imply future EU membership and migration rights, an issue which is controversial in many European countries. Instead the six are described as "Eastern European Partners" and "partner countries", a development that will deeply disappoint Ukraine and strengthen Russia's attempts to build a "sphere of influence" in the region. EU ambassadors have also watered down commitments to "visa liberalization", allowing people from the region greater work and business access to European countries.

Note EU-Digest: The watering down of the "enthusiasm" for the six former Soviet countries to become closely aligned with the EU by Germany and the Netherlands is appropriate, given the political instability of these countries, the experience acquired with some of the other former Soviet countries following their accession into the EU and the strong ties of the EU with Russia in many areas.

Labels: Eastern Europe, Eastern Partnership, EU

ECB rejects eastern fast-track to eurozone - by Valentina Pop

The European Central Bank (ECB) on Monday dismissed proposals made by the International Monetary Fund for eastern European member states to adopt the euro even without full membership of the eurozone. "This [IMF proposal] is not realistic. The membership for European monetary union has very clear rules and these rules have to be followed. From an economic point of view, it would not be a good signal [for] the confidence . . . towards the euro," Ewald Nowotny, ECB governing council member, told Reuters. The bank was responding to the publication in the Financial Times of a confidential report drafted by the IMF last month as part of a regional anti-crisis strategy for the eastern EU countries. It suggested that the EU should relax euro entry rules for countries like Hungary and Poland so that these countries can join as quasi-members without needing to hold a board seat in the ECB.

Note EU-Digest: A very good decision by ECB to not allow fast track for Eastern European Nations. It would totally tarnish the good reputation of the euro.

Labels: Council of Europe, Eastern Europe, ECB, fast track

Obama to Woo European Public on Overseas Trip - by Jonathan Weisman and Stephen Fidler

Mr. Obama also intends to extend his efforts beyond official meetings. He will hold a town hall-style meeting at a sports arena in Strasbourg, France, European diplomatic officials said. And the White House is looking for a site in Prague for the first public foreign-policy speech of Mr. Obama's presidency, according to Petr Kolar, the Czech Republic's ambassador to the U.S. Turkish press reports say Mr. Obama's visit to Istanbul after the Prague summit will include a stop at the Hagia Sophia, a Byzantine-era church converted to a mosque under the Ottomans, and a stop at the national Sultan Ahmed Mosque.

The emphasis on including public events, a deliberate nod to Mr. Obama's successful tour through Europe as a presidential candidate, stands in contrast to the divisions that have opened on policy since he took office.

Note EU-Digest: Mr. Obama deserves a warm welcome from every European. He brings a refreshing opportunity for Europe and America to renew their historical close and friendly ties after the eight years of dogmatic Bush Administration policies, which in relation to the EU were based on divide and conquer tactics in relation to what the Bush Administration called the "old and new Europe". That policy has inflicted long term damage to the integration process of the new Eastern European member states into the EU family of nations. It has encouraged unilateral political, military and commercial deals between the US and the new Eastern European EU member states, without prior consultation with the EU Commission. This is still going on. In essence the US has never given any clear indication by its actions that it recognizes the EU and its institutions as a sovereign Union of Nation States. So when Mr. Obama visits Europe and politicians jockey to be seen by his side when pictures are taken they must also make sure that they ask themselves that the story they hear is not the same story "repackaged" with a more appealing ribbon around it.

Labels: Barack Obama, Eastern Europe, EU, Turkey, US

Romania Gets 20 Billion-Euro Bailout Aid From IMF, EU - by Adam Brown and Irina Savu

Romania got a 20 billion-euro ($27 billion) loan from the International Monetary Fund, European Union and other lenders, the sixth eastern European nation to be bailed out as the region’s economies struggle to stay afloat. About 13 billion euros will come from the IMF and the rest from the EU, World Bank and the European Bank for Reconstruction and Development, the Washington-based fund said in a statement.

The “package should more than cover Romania’s financing needs this year,” said Ozgur Yasar Guyuldar, an emerging markets strategist in Vienna at Raiffeisen Centrobank, in an e- mail today. “The IMF deal will certainly bring some discipline to the budget. I view this aid package as a big relief.” The loan brings to more than $60 billion the total handed out to eastern Europe. Hungary, Ukraine, Belarus, Latvia and Serbia have also sought bailouts to prevent defaults and aid banks.

Note EU-Digest: The next step is to closely monitor that these funds get properly allocated and not squandered away by corruption which has been a constant problem in Romania.

Labels: Bailout, Eastern Europe, Economy, Romania

Value of European Missile Defense Questioned

A number of independent assessments have highlighted the cost and questioned the effectiveness of U.S. missile defense systems proposed for deployment in Europe. It would cost between $9 billion and $13 billion to field a radar in the Czech Republic and 10 missile interceptors in Poland, the Congressional Budget Office found, adding that the European system would not protect the entire continent against Iranian missiles. The United States in the last 24 years has spent $144 billion on programs to defend the country against missile threats, according to the agency. "Some observers also continue to question how much confidence there should be in the system's potential operational or combat effectiveness based on the types of tests conducted and the test results to date," the Congressional Research Service said in January.

Labels: Eastern Europe, EU, Missile Crises

East Europe Crisis ‘Manageable,’ EBRD’s Berglof Says - by Agnes Lovas

Eastern Europe’s financial crisis is “manageable” so long as western banks continue lending to their units in the region, said European Bank for Reconstruction and Development Chief Economist Erik Berglof. Emerging European nations are struggling to refinance short- term debt as the global crisis that has left banks with more than $2 trillion in losses and writedowns cuts off credit and investment and plunges most of the region into a recession. “The key is continued support from banks in Western Europe to their subsidiaries in the east,” Berglof said in an interview yesterday in London. “As long as those flows continue, that’s a very large part of the solution to the problem. The situation is manageable but we must make sure that it is being managed.”

Labels: Eastern Europe, ECB, EU

Labels: Eastern Europe, Economy, EU

EU- Tough Love For Eastern Europe - by VGidya Ram

The European Union's decision to play tough and reject Hungary's call for a 180.0 billion-euro ($226.3 billion) aid package for Eastern and Central Europe weighed on the region's already-beleaguered currencies on Monday, but it was probably a good move. European leaders, including German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso shot down Prime Minister Ferenc Gyurcsany's suggestion that an aid package of that size was necessary to avoid "a new Iron Curtain…to divide Europe into two parts." He also called for the E.U. to relax the stringent criteria for joining the euro zone. The rejection triggered a sell-off in both currencies and stocks, with the Hungarian forint down 2.4% against the euro, at 306.98 to the euro, and the Polish zloty down 2.2%, at 4.75 to the euro, in Monday morning trade.

Labels: Eastern Europe, EU

Sarkozy says eastern Europe poses risk for EU - by by James Mackenzie

The financial crisis in eastern and central Europe poses a risk to the European Union but necessary measures to confront the situation have been taken, French President Nicolas Sarkozy said on Sunday. "On the question of eastern and central Europe, there is an economic and political risk for them and for us," he told a news conference after a summit of EU leaders in Brussels. But he said that the combined efforts of international organizations had been mobilized and the measures needed to face up to the crisis had been taken.

Labels: Eastern Europe, EU, Sarkozy

EU leaders reject protectionism - by Ilona Wissenbach and Marcin Grajewski

European Union leaders rejected protectionism on Sunday to prevent a new "iron curtain" dividing the 27-nation bloc into rich and poor halves during the global economic crisis. At a summit called to bridge differences over how to handle the crisis, leaders made a new commitment to the EU's single market -- a response to concerns that any protectionist moves to prop up national industries would undermine EU unity. They did not agree on any regional aid package to the whole of central and eastern Europe after opposition from German Chancellor Angela Merkel.

Hungary called last week for rules on entering the 16-nation euro zone should be relaxed to help others to enjoy the exchange rate stability it offers. But Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro zone countries, ruled this out. "I don't think we can change the accession criteria to the euro overnight. This is not feasible," Juncker told reporters.

Labels: Eastern Europe, Economy, EU SUMMIT, Protectionism, Unity

EU Eastern Bloc Countries Victims of Over-borrowing in Foreign Currencies and Large Current Account Deficits

EU leaders at Sundays informal summit meeting are not expected to take concrete decisions. The next official summit, on March 19-20, is likely to take more binding decisions.At this summit Western European governments are expected to express alarm that, apart from the strains the world financial emergency is imposing on the eurozone's unity, contagion threatens to spread into their banking systems and economies from the crisis-ridden EU Eastern Bloc Nations. This Sunday's EU summit will therefore certainly address the issue of financial stability in the non-eurozone, new member states.

Labels: Eastern Europe, economic meltdown, EU

Eastern European banks given €24.5bn aid - by David Charter

A €24.5 billion (£21.8 billion) bailout of Eastern European banks was announced yesterday as efforts were stepped up to prevent the economic downturn causing a damaging East-West split on the Continent. The funds will come from the European Bank of Reconstruction and Development (EBRD), the World Bank and the European Investment Bank (EIB). The EBRD, set up to help former Iron Curtain countries to make the transition from communist rule, will be providing up to €6 billion for the financial sector in 2009-10. The EIB will commit €11 billion and the World Bank €7.5 billion.

The move came as European leaders prepared for a summit tomorrow called by the Czech Republic, which holds the rotating presidency of the European Union.

Labels: Banking system, Eastern Europe, EU Economy

With the way Eastern European currencies and bank shares have dropped this week, it seems as if investors are expecting a full-blown financial crisis to hit the region and that Western European banks that had established themselves there are going to cut and run. Is such a nasty form of economic decoupling set to happen? The answer is no - "We really don't know what's going to be the peak cycle loan-loss charge," said Pedro Fonseca of Keefe, Bruyette & Woods. "A lot of these foreign banks have made a lot of money in this region. They are not going to exit these markets, which hold a lot more promise than at home," he added. "What you will see is more careful lending." BNP Paribas has started trimming back operations in Ukraine and refocusing its efforts on collecting loans. (See "BNP Stung By Ukraine.")

Labels: Eastern Europe, Economy, EU

Will Eastern Europe Trigger a Financial Meltdown?

We've commented from time to time that a possible financial flashpoint is countries that got themselves in the same fix as Iceland , of having a banking sector engaged in the generally risky practices that were standard form recently, and was outsized relative to the economy (Willem Buiter also points out that that precarious situation is made worse by having your own teeny currency).In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not. Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

Note EU-Digest: most of the quotes in this blog come from the conservative British newspaper the Telegraph, one of the most anti-EU newspapers in the UK, who would love to see the EU disintegrate. It won't happen and to make matters worse for them, Britain might even be forced to accept the euro as its currency in order not to implode economically.

Labels: Eastern Europe, Economy, EU

France, Eastern Europe Make Progress Toward EU Climate Accord - France, Eastern Europe Make Progress Toward EU Climate Accord - Katarzyna Klimasinska

France and nine eastern European countries moved nearer to a compromise on a new European Union climate change agreement, after a Polish-led coalition of new member states won a pledge for more exceptions. “We have managed to make some progress,” French President Nicolas Sarkozy said today after a meeting with Eastern European leaders in Gdansk, Poland. “Despite the financial crisis, none of the member states questions the target.” The EU is seeking to reduce fossil fuel emissions by cutting quotas of allowed pollution and pushing power producers to buy the carbon dioxide emission permits now allocated largely for free. The EU wants to introduce purchases under a so-called auction system in 2012. Poland, which gets 93 percent of electricity from coal, has previously threatened to block changes, saying they would boost inflation and hamper economic growth.

France, current holder of the 27-nation EU’s rotating presidency, doubled the exception period for Polish power utilities, so that they wouldn’t have to buy all the permits until 2019, Polish Prime Minister Donald Tusk said today.

The EU aims for a deal by year-end, saying an accord among rich and poorer European nations would encourage the U.S. and China to sign up to a new United Nations treaty. Governments worldwide have gathered in the Polish city of Poznan to negotiate a successor to the Kyoto Protocol, which expires in 2012. “Europe must be an example for others,” Sarkozy said today.

Labels: Eastern Europe, Emission reduction, EU, France, Sarkozy

Massive Foreign Reserves Outflow Puts Russia's Ruble Trading Band Under Threat

Russia's currency reserves, the third-biggest in the world, are falling steadily as tumbling oil prices and an exodus of capital are piling the pressure on the central bank and government policymakers to accept a devaluation in the ruble. Oil prices which are now down 60% from their july peak, slowing economic growth and increasing investor concern are steadily draining Russia's foreign exchange reserves, which fell 19 percent (to $484.6 billion) in the 12 weeks through Oct. 31. This is down from $598.1 billion in the week before the invasion of Southern Ossetia. Russia had been using the reserves to try and contain the upward movement in the ruble was thought to present a threat to the competitiveness of exports. But resistance is now becoming increasingly difficult in the fact of a 13 percent drop against the dollar since August 1.

Labels: Eastern Europe, Economy

Eastern Europe Heads for Slowdown

While eastern European economies have yet to be hit hard by the international financial crisis, the happenings in the West are causing a slowdown in many of the former Soviet Bloc nations. Eastern Europe's slowing economies face growing risks from the global credit crunch, but most of the ex-communist regions will post faster growth than western Europe in 2009, the International Monetary Fund (IMF) said Wednesday. Slovakia, which is slated to switch to the euro on Jan. 1, was tipped to lead growth next year -- 5.6 percent -- followed by European Union newcomers Romania, 4.8 percent, and Bulgaria, 4.2 percent.

Labels: Eastern Europe, Economy, EU

East Europe Best Not Depend on 'Obsolete' NATO - by Jeam Matouck

For the founders, the European Union was destined to become a confederation with the partial status of a sovereign state and which implied political integration. For the East, just as for the British, it should remain just a vast single market. With fear in the belly of the Russian bear, they have never relied on European integration to ensure their security. In their view, only the United States could provide that. Hence their absurd following of the Americans into the Iraqi adventure. Hence their irrepressible desire to join NATO.A grave error on their part, because the United States, entangled as it is in the Iraqi affair and with its allies in Afghanistan, won't budge for a piece of the former empire's confetti [Georgia] and perhaps not even in case of a more serious invasion. Especially since the new American leaders, starting in November, are likely to mobilize all their forces on domestic affairs.

And by the way, what is NATO? It was intended to consolidate the capitalist countries of Western Europe and the United States to defend against a supposed Soviet attack, which everyone knew to be unlikely as soon as a certain level of nuclear symmetry had been achieved. From the moment the USSR had disappeared and Russia, somewhat weakened, no longer threatened anyone, what use did it serve? We must work tirelessly to convince our Eastern European partners that in the long run, the political integration of East Europe is the best guarantor of security, and incidentally, that we haven’t welcomed them simply to finance their development or receive their homeless! And we must simultaneously maintain good relations with Russia, which is recovering and which obviously has no desire other to develop and enrich itself with dignity.

Labels: Eastern Europe, EU, Nato

Why We Aren’t Free Yet - by Natasha Srdoc

Few citizens in southeast Europe would be surprised to hear that economic freedom in their countries is “repressed”. Whether or not this state of affairs is addressed head-on in diplomatically-tweaked reports from Brussels, it is common knowledge, muttered about in cafes across the region – even where statistics show that economic growth is brisk.

In contrast with the narrative on reform preferred by the EU, which focuses mostly on governmental compatibility with EU norms – which in some cases actually hinder economic freedom rather than enabling it – this index seeks to answer the questions of essential interest to the average person. Does the government let me keep my money, or does it confiscate a lot of it as taxes? Is private property protected in general? Can I get a job easily? If I run a business, can I hire and fire easily when I need to? Can I buy and sell easily within the country, and across its borders? Does the government compete against private businesses, or does it want them to thrive? How important is corruption in this picture? The index grades countries on questions like these. It is along such lines that its authors have once again, as in years past, graded as “repressed” all the countries of southeast Europe. Overall scores were better, with Albania, Bulgaria, Romania and Macedonia deemed “moderately free” and Croatia and Bosnia-Herzegovina “mostly unfree”. (The index’s one drawback is that it does not grade Serbia and Montenegro, owing to what the authors say was a lack of reliable data. However, both countries are none the less examined, along with all others.)

In order to beat back the scourge of corruption we need both to help ourselves, most importantly to be helped by outside forces. Citizens can exert a certain degree of pressure, by resolving not to accept endemic corruption. However, they would benefit greatly from more immediate and more robust support from international partners. This is why, contrary to conventional wisdom, many citizens of the countries of southeast Europe would be grateful to the EU and NATO if these organisations would more explicitly pressure governments in the region to curb corruption.

Note EU-Digest: Ms.Natasha Srdoc who is president of the Adriatic Institute for Public Policy, a free-market think tank, certainly has a point here. The EU must must make more of an effort to curb this rampant corruption which one finds in both the Public and Private Sector. If it takes sanctions to do so let it be sanctions. Corruption is like a cancer and will spread also into Western Europe if it is not eradicated.

Labels: Balkans, Corruption, Eastern Europe

For the complete report from the www.bbj.hu click on this link

EU - Credit card use on the rise in CEE

A report reveals that the number of credit cards in Central and Eastern Europe (CEE) more than tripled in the two year period up to the end of 2006. Credit card holders in CEE numbered 27 million in 2006. The total number of payment cards (including debit, charge and credit cards) has grown by 64% to 187 million in 2004-2006.

According to the report, debit cards are the most widely held type of payment card in the region, representing 83% of all cards in issue against 52% in Western Europe. However, debit cards share of the market has decreased from 90% in 2004 to 83% by the end of 2006. This was caused by the increase in credit card, which more than tripled between 2004 and 2006, reaching 15% of total cards in the region. In all 13 markets, the number of credit cards grew from 8 million to 27 million between 2004 and 2006.

Poland, Russia and the Ukraine account for about two thirds of these cards and for much of the new growth over this period. The report says there are on average 74 payment cards per 100 adults in CEE, compared to 203 in Western Europe.

Labels: CEE, Credit Cards, Eastern Europe, Economy, EU

While the Celtic tiger takes a snooze, the young Eastern European tigers are up and running.

WHILE the Celtic tiger takes a snooze, the young Estonian tiger is up and running. As are the Czech and Hungarian cubs. Those countries' envoys are coming here in numbers with the intention of wooing away some of those immigrant workers who have helped to drive our years of rapid economic growth. An unprecedented 18 countries have taken stands at the Opportunities Fair at Croke Park next month. While the Irish building industry has ground to a crawl, Poland's construction is booming and wages have doubled. The Polish stand in Croke Park, at the end of February, will be delighted to share the good news and extol the benefits of a return to Krakow, Gdansk or Bydgoszsz.

Labels: Eastern Europe, EU, Ireland

Eastern Europe in 2008

THE most urgent thing to hope for is a soft landing for economies grown complacent amid perpetual sunshine and friendly faces. Large imbalances and a global credit crunch are an alarming mixture. Lars Christensen, a hawkish analyst of the region at Danske Bank in Copenhagen, notes that twitchy investors in the Baltic states and Bulgaria are already sending money market rates higher, and have driven down the value of the Romanian lei. Some early signs indicate that Santa will be kind. Credit growth is slowing. Estonia’s growth rate and property prices have dropped sharply: bad news for construction companies, but good for everyone else (and its current growth rate of 6% is still mouth-wateringly good by West European standards). But inflation remains far too high, sharply up on the year-end figure for 2006 in every country except Hungary. Higher prices for food and natural gas will make that worse, stoking the pressure on competitiveness.

Labels: Eastern Europe, Economy, EU

Central Europe bloc can counter EU influence of France, Germany

The leaders of Poland and Slovakia on Monday pledged greater unity among Central European states to gain greater influence over European Union decision making. Together the so-called Visegrad group made up of Poland, Slovakia, the Czech Republic and Hungary, would have more influence in the European Council than France or Germany, said Polish President Lech Kaczynski and Slovak President Ivan Gasparovic after a meeting in the small Slovak town of Kezmarok. Gasparovic pointed out that the four-state bloc, founded in 1991, has more votes in the council - the EU's key legislative body made up of all 27 member states - than France or Germany.

Labels: Eastern Europe, EU, France, Germany

People power - Eastern European Governments now face demanding voters

The gloomy story of east European politics goes like this. Politicians are out of touch and voters don’t care; outside pressure can be safely ignored; reform stalls or goes backwards. That certainly has seemed the case in many new member states of the European Union, and in countries queuing to join. It looks like the story of Georgia now. But the real trend may be a different one: voters are increasingly impatient with inept, heavy-handed or corrupt governments. Last month Polish voters threw out the brusque and incompetent Law and Justice party, overturning their own reputation for cynicism and apathy in the process.

Labels: Eastern Europe, EU, Political

The Carlyle Group (The Bush Economic Mafia) creates group to invest in Central, Eastern Europe

D.C.-based Carlyle, a private-equity giant with more than $71 billion under management, said the new team will be headed by Ryszard Wojtkowski, who begins his duties immediately as a managing director based in Warsaw, Poland. Carlyle's new team for Central and Eastern Europe will make growth capital and buyout investments in companies across sectors such as consumer, retail, industrial, information technology, media, health care and financial services. The scope of Carlyle's investment capabilities will extend to Poland, the Czech Republic, Hungary, Slovakia, Romania, Bulgaria, Slovenia and the Baltic states.

"We see long-term opportunity in Central and Eastern Europe," said Daniel D'Aniello, a Carlyle co-founder and managing director, in a company statement.

It is hard to imagine an address closer to the heart of American power. The offices of the Carlyle Group are on Pennsylvania Avenue in Washington DC, midway between the White House and the Capitol building, and within a stone's throw of the headquarters of the FBI and numerous government departments. The address reflects Carlyle's position at the very center of the Washington establishment, but amid the frenetic politicking that has occupied the higher reaches of that world in recent weeks, few have paid it much attention. Elsewhere, few have even heard of it. This is exactly the way Carlyle likes it. For 14 years now, with almost no publicity, the company has been signing up an impressive list of former politicians - including the first President Bush and his secretary of state, James Baker; John Major; one-time World Bank treasurer Afsaneh Masheyekhi and several south-east Asian power brokers - and using their contacts and influence to promote the group. Among the companies Carlyle owns are those which make equipment, vehicles and munitions for the US military, and its celebrity employees have long served an ingenious dual purpose, helping encourage investments from the very wealthy while also smoothing the path for Carlyle's defense firms. But since the start of the "war on terrorism", the firm - unofficially valued at $13.5bn - has taken on an added significance. Carlyle has become the thread which indirectly links American military policy in Afghanistan to the personal financial fortunes of its celebrity employees, not least the current president's father. And, until earlier this month, Carlyle provided another curious link to the Afghan crisis: among the firm's multi-million-dollar investors were members of the family of Osama bin Laden.

Labels: Carlyle, Eastern Europe, George Bush, US

Skilled workers leaving Eastern Europe in droves for Western Europe - by Judy Dempsey

Slovakia could soon become the world's biggest car producer per capita - if it can find enough skilled workers to assemble the vehicles.

The shortages have become so acute that several countries, particularly Poland, are issuing special work permits to citizens from Ukraine and Belarus, Uzbekistan and Tajikistan in an attempt to plug the holes, according to the institute.The shortages have become so acute that several countries, particularly Poland, are issuing special work permits to citizens from Ukraine and Belarus, Uzbekistan and Tajikistan in an attempt to plug the holes, according to the institute.

Labels: Eastern Europe, EU, Labor

Europe must focus on the East

For Europe, what happens in the East, in Ukraine, Belarus, and in the Caucasus and Central Asia, is vitally important. That is one reason why the Organization for Security and Co-operation in Europe (OSCE) Parliamentary Assembly is holding its 16th Annual Session in Kyiv this week, from 5-9 July. I look forward to our discussions in the coming days on a whole rang of important issues, from energy security to trafficking in human beings and conflict settlement.

I would argue that after the successful enlargement of the European Union, OSCE’s work in conflict resolution and democracy building must focus on the transitioning democracies in the East. These countries are full and equal members of the OSCE and its Parliamentary Assembly. We need to hear their voices in our meetings and our discussions. We strongly prefer co-operation and dialogue over isolation and silence.

Labels: Eastern Europe, EU

Increasing prevalence of HIV-infected blood donations in eastern Europe

There is considerable variation in the prevalence of HIV-infected blood donations across Europe and unless action is taken to tighten up screening, some countries in Eastern Europe risk HIV-infected blood donations entering the blood supply, according to a survey published in the May 24th edition of Eurosurveillance Weekly Release

analysis showed that the prevalence of HIV-infected blood donations has fallen steadily in Western Europe since the 1990s, and remained stable in Central Europe. However, in Eastern Europe, the prevalence increased from less than one donation per 100,000 in 1995 to 40.3 per 100,000 in 2004. “This trend is a reflection of the development of the HIV epidemic in those regions, with many countries in the east experiencing high ongoing transmission of HIV, in particular among injecting drug users, and a large pool of newly infected potential blood donors have not yet been diagnosed”.
Earlier this week, the US Food and Drug Adminstration (FDA) reaffirmed its blanket ban on gay men ever giving blood.

Labels: Eastern Europe, Gay Community, HIV

Eastern European EU members the achilles heel of Merkel's grand EU alliance plans with Russia - by Ian Traynor

As the German chancellor, Angela Merkel, flew to Samara on the Volga last Friday night for dinner with President Vladimir Putin and to open today's summit, it was clear that the meeting was being hijacked by a long list of disputes focused on eastern Europe and the Balkans.

The roots of the estrangement lie in the transformation of the EU with the entry of 10 central European and Balkan states since 2004 - all of them former Soviet satellites nursing grievances to varying degrees against Russia.

The new EU member states of Poland and Lithuania have been arguing this week for the summit to be called off, and criticising the German preparations. For historical reasons, the east Europeans are highly sensitive to any sign of Germany cutting deals with Russia over their heads. Note EU-Digest: "What had been feared by European political insiders before the EU was "forced" by the US to take in the Eastern European nation states into the EU before they had reached at least some form of political stability, is becoming a reality - the new Eastern European EU member states are turning out to be the Achilles heel of Europe."

Labels: Eastern Europe, EU, European Unity

Debunking the myth of "Eastern Europe"

"Prague and Wenceslas Square, which is really a big avenue, are symbols of the economic progress that the Czech Republic has made since the overthrow of Communism in 1989. But here is the rub: The Czechs have shaken off the material deprivation that accompanied Communism, but they can't get seem to get rid of the labels."

Labels: Eastern Europe, EU, the Czech Republic

As wages rise, eastern Europe could become a victim of its own success - by William Kole

When the Communists were ousted across eastern Europe, the capitalists moved in. For foreign companies from McDonald's to Microsoft, it was an exciting new frontier - a cheap place to make things, with 70 million potential consumers to buy them. Now, 18 years after the East embraced economic freedom, come the first tentative signs that an unprecedented boom may be on the verge of going bust.

Although big business is still expanding briskly across the region, wages, real estate and taxes are rising fast. Put simply, for companies looking to outsource manufacturing or services, the newest corner of the European Union just isn't the bargain it used to be.

Labels: Eastern Europe, Economy, EU

Czech Premier defends USA missile system decision - "Czech decission not compatible with the EU’s general interest in security"

Czech Prime Minister Mirek Topolánek last Friday defended his country’s decision to begin talks with the United States about building part of its controversial missile defence system on Czech soil. “The Czech Republic has the right to sign a bilateral agreement on the system,” MTI news agency reported him as saying after meeting Prime Minister Ferenc Gyurcsány.

The decision has drawn criticism from European Union foreign policy and security chief Javier Solana, who last Thursday said that “sovereignty has to be made compatible with the EU’s general interest in security.”Russia is also unhappy about the system, and has warned it could spark a Cold War-style arms race. The US claims the system is intended to defend against what they call "a missile threat from Iran". - A claim similar to one 4 years ago about the threat of weapons of mass destruction in Iraq.

Labels: Eastern Europe, Missile Crises, Russia, Solana, the Czech Republic, US

Europe at crossroads - "Eastern Europe's inflexibility towards EU unity"

On its 50th anniversary, the EU can claim quite a positive record. But anyone can see that the integration process has come to a halt. The two expansion waves have taken a hefty toll on political unification. It’s not just the practical difficulty of finding a single voice for 27 governments. Most importantly, EU attempts to wean itself from American hegemony have been seriously undermined. London is not alone in this effort anymore. Rather, it is spearheading a group of states that lend it greater political weight.Eastern European states such as Poland, the Czech Republic and Hungary do not just fall behind British diplomacy; often, they are the ones to take the first step. They often make claims and objections without any will to negotiate in a constructive fashion. It’s not just that they are strangers to the EU’s consensus-building habits. Their inflexibility comes mostly from a feeling of superiority drawn from their US alliance.

The EU has two options. One is to fall back on familiar tactics and small, often rhetorical steps that lead nowhere. The second is to cut ties altogether and implement a policy of so-called “reinforced cooperation” with ad hoc partnerships in projects that could inject the Union with a fresh momentum. The eurozone is a precedent and could be the model for a core of states.

Labels: Britain, Eastern Europe, EU, inflexibility, Integration, Poland, Political, US

Putin's aide calls for intensified Russia-EU dialogue

Russia and the European Union should start a more active dialogue on contentious issues to avoid creating a dividing line on the continent, a Russian presidential aide said Friday. "We have been conducting an insufficiently intensive dialogue on security issues in Europe on the whole, and on U.S. plans to deploy its missile defense system in Poland and the Czech Republic in particular," Vladimir Putin's special envoy on relations with the EU, Sergei Yastrzhembsky, said at a French university.

Yastrzhembsky said he wishes the EU would play a more significant role on the international scene. Russia's foreign minister said earlier Friday that U.S. plans to deploy air defense missiles in Europe could negatively affect Russia's relations with NATO if implemented unilaterally without Russia's involvement or any consideration of collective interests.

Labels: Eastern Europe, Missile Crises, Russia, USA

Europe of 2057: A big future is seen in poll - by Meg Bortin

The Europe of 2057 is a larger place, its borders stretched eastward to encompass Turkey and, probably, Russia. It is a greener place, where wind and sun power have supplanted fossil fuels. It has been the battleground for at least one new war. And the dominant language is English.This vision of Europe's future emerges from a new trans-Atlantic poll timed to coincide with the 50th anniversary of the European Union.

These images contain good news for supporters of Europe's historic endeavor begun on March 25, 1957, with the signing of the Treaty of Rome: Fifty years from now, more than 5,300 European respondents strongly agreed, the European Union will still exist. In overwhelming numbers, European respondents also believe that the euro is here to stay and will be the standard currency for Europe in 2057.

Perhaps the most startling reply concerns the possible inclusion of Russia in the EU, given that the issue is not even on the table today. While three former Soviet republics have joined the 27- member bloc and others , like Ukraine are seeking entry, Russia — after looking to Europe in the 1990s — has pulled back.By even larger numbers, respondents envisage the Europe of 2057 as encompassing Turkey.Finally, in a response likely to ruffle feathers in Paris, Berlin, Madrid, and Rome, respondents overwhelmingly agreed that English would be the language most widely spoken in Europe 50 years from now. That view was shared by the French (71 percent), the Germans (73 percent), the Spanish (76 percent), the Italians (81 percent), and, of course, the British (83 percent).

Labels: Eastern Europe, Future, Polls: Perceptions, Russia, Turkey

Former communist nations of Europe lag behind West in green energy, causing friction with EU

Sun-baked Bulgaria, windy Poland and farm-rich Hungary have thousands of megawatts in untapped renewable energy that the European Union wants used to fight global warming. But eastern Europe remains heavily dependent on fossil fuels, causing friction between older and newer EU members as the bloc pushes an ambitious plan to boost its reliance on green energy.

About 94 percent of the electricity for coal-rich Poland comes from coal-fired plants, a major source of the carbon emissions that contribute to global warming. "They are lagging behind," Beatriz Yordi, an EU official in charge of promoting renewable energy, said of eastern European member nations. "And we are pushing them to catch up."

Labels: Alternative Energy Resources, Eastern Europe, EU, Poland