Russia deploys new missile systems in secessionist areas

Hi-tech air-defence missile systems have been deployed by Russia in the disputed Georgian region of Abkhazia. General Alexander Zelin, the commander of Russia's air force, confirmed on 11 August the deployment of the advanced S-300 system, which can detect, track and destroy cruise and ballistic missiles and aircraft. The announcement, two years after Russian military action in Georgia, sent a defiant signal from Moscow to both Tbilisi and to western authorities.

General Zelin said that air defences of other types had been deployed in Georgia's other Russian-backed rebel region, South Ossetia. He said the defences would also protect Russian bases in Abkhazia and South Ossetia.

Eka Tkeshelashvili, Secretary of Georgia's National Security Council, said the move showed Russia was "strengthening its military control over these territories".

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Government denies reports of possible agreement with IMF

The Economy Ministry denied on 25 August reports that it was seeking a new loan agreement with the IMF when talks resume in the autumn, declaring that there is no need for such a deal and would not be in the future. “The talks will be part of the regular consultations, and do not have the goal of reaching a new loan agreement,” the ministry said in a statement.

The Hungarian currency, the forint, reacted negatively to the news and lost the ground gained against the euro, falling to 284. Subsequently it rose again after the ministry stated that Hungary was ready to return to the negotiating table and renew the talks with the IMF that had collapsed in July.

The government’s apparent volte-face proved embarrassing. A time when financial markets could not be considered stable did not seem to experts the right moment to declare that Hungary did not need financing from non-market sources. The country has €1.3 billion of maturing debt to be repaid by the end of 2010, which will rise to €4.3 billion in 2011 as the country starts to repay the IMF-EU credit.

The daily newspaper Nepszabadsag pointed out that the talks with IMF in the autumn could give the government an opportunity to smooth out differences and draw on the last tranches of the loan, which had not so far been used.

Opposition parties concerned about government influence on media

Opposition parties claimed on 11 August that a government decision to combine several media and communications regulators into a new authority with wide-ranging powers is undemocratic. It would increase the government's influence over public broadcasters.

The newly created National Media and Telecommunications Authority will be in charge of regulating everything from phone companies and cable TV providers to public and private radio and TV broadcasters, as well as the internet. Gergely Karácsony, of the Politics Can Be Different party, said this would potentially be transforming media into “government mouthpieces”. The new law would make it impossible for public media to work independently from the political parties and the government, he argued.

Prime Minister Viktor Orbán has been named Annamaria Szalai to head the organization for a nine-year term. She was previously a nominee from the government party Fidesz on the regulatory boards that have now been abolished. She has pointed out that the new regulator would be cheaper to run and was needed because of the vast changes in media and telecommunications. "The aim is to have content in the public media of much higher value and better quality," Szalai said on national television a week earlier, adding that there would be "a great distance" kept between politics and media.

László Kovacs of the opposition Socialist Party said the new rules did not conform with European standards because they gave the government too much influence on state media. Both the Socialists and the far-right Jobbik, the second-largest opposition party, both announced that they would ask the Constitutional Court to review the law creating the regulator.

The decision of recently elected President Pál Schmitt to sign the media legislation into law without first sending it to the Constitutional Court for vetting has been criticised.

The government party Fidesz, and their close allies the Christian Democrats, have a two-thirds majority in parliament, giving them the opportunity to pass legislation — including constitutional amendments — without needing any support from the opposition.

President Schmitt attends first cabinet meeting

President Pál Schmitt said he will attend cabinet meetings every six months, after appearing at the cabinet meeting on 11 August at the invitation of Prime Minister Viktor Orban.

Schmitt confirmed that he had signed all of the 13 bills that Parliament had approved during the summer because he had found no constitutional problems with any of them.

He added that he would work closely with one or two ministers, including Foreign Minister János Martonyi with whom he will hold consultations before his trips abroad. Schmitt also plans to hold consultations with National Resources Minister Miklós Rethelyi on the Hungarian language, young people, how they exercise, and “lifelong studies”, as well as with Defence Minister Csaba Hende and deputy prime minister Zsolt Semjen who deals with ethnic Hungarians abroad.

Newly elected President of Hungary is former Olympic gold medallist

Pál Schmitt, aged 68, was elected by the Parliament of Hungary with an overwhelming majority of 263 out of 322 votes. He succeeded outgoing President László Solyom at the end his 5-year term and was sworn in as Presiodent on 6 August. The President has been a leading figure in the Fidesz Party, and his election has raised concerns from the opposition that he will support the party’s efforts to change the constitution and limit press freedom.

The role of president is largely ceremonial in the country. However, he can send any legislation back to parliament for consideration or refer it to the Constitutional Court.

Consumer prices rise 4% in June

The rate of annual inflation slowed to 4% in July from the 5.3% increase in June, the Central Statistics Office announced on 11 August. The month-on-month increase was 0.1%, while the average inflation for the first six months came in at 5.4%.

For July analysts had expected a 3.8% rise in consumer prices, citing rising food and energy prices to explain the higher July inflation. Food prices rose 2.8% year-on-year but some seasonal products saw double-figure increases. Energy prices on average rose by 9.4% in July.

Government wants to arrange emergency credit

The government has been planning to ask the International Monetary Fund and the European Union for a ''precautionary'' two-year rescue package worth €10 to €20 billion as it tries to control its finances.

The Economy Minister, György Matolcsy, had said in early July that Hungary believed it needed to arrange a new credit line from the IMF and the EU in case the European situation deteriorated. The government would seek agreement to run a larger deficit than planned next year.

Under the current plan, agreed with the IMF, Hungary is meant to keep its budget deficit to 3.8% in 2010 and below 3% in 2011. Matolcsy suggested that the 2011 target may need to be relaxed.

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Governor ousted after local unrest

Kaliningrad Governor Georgy Boos was ousted on 16 August amid growing public discontent in his region, becoming the first from the batch of governors appointed after the Kremlin scrapped direct elections in 2004 to be unceremoniously dumped from office.

Both pro-Kremlin and opposition politicians praised the firing of the unpopular first-term governor as a sign that democracy was working, although the opposition said it feared that the next governor was unlikely to run the region any better.

The United Russia party decided the same day not to include Boos on its list of governor nominees because he lacked popular support. Party secretary Vyacheslav Volodin said:?“unfortunately, while support for our friend and colleague Georgy Boos was strong, it was not enough for him to continue his work."

Kaliningrad was the scene earlier this year of large rallies where protesters demanded both the resignation of Boos and of Prime Minister Vladimir Putin, who heads the United Russia party.

United Russia presented President Dmitry Medvedev on 16 August with three candidates with strong ties to the region: Kaliningrad Mayor Alexander Yaroshuk, his predecessor and current State Duma Deputy Yury Savenko and Nikolai Tsukanov, who heads one of the city's districts. Speaking at his Sochi summer residence, Medvedev embraced the party's reasoning, saying regional leaders must enjoy trust from the local populace. "They need to be people with absolute support and trust from the citizens who live there," he said.

Regional governorship elections were scrapped by Vladimir Putin in 2004 in favour of a system in which the president appoints candidates and regional legislatures confirm them. Under Medvedev, new rules were introduced that allow the party that controls the regional legislature to submit three candidates to the president, who can then select one or go with someone else altogether.

Alexander Kynev, an independent analyst, said Boos' ouster demonstrated the failure of the Kremlin's policies toward the regions. Unlike other United Russia governors, Boos tried to establish a dialogue with the opposition early this year. "But he did that only after the situation verged on a crisis," Kynev said.

Kaliningrad has a tradition of more liberal politics, which have seen residents there develop closer ties with western Europe than with Moscow. There had been fears that the federal government would not respect these traditions. While Kaliningrad had prospered somewhat in recent years, the region still relied on federal subsidies, and locals say Boos has failed to deliver on promises of an economic resurgence. In January 2010, about 10,000 people protested in central Kaliningrad against rising communal tariffs. Another protest was held weeks later. The rallies were organised by several opposition groups, including the Solidarity movement and the Communists

Igor Revin, head of the Communist faction in Kaliningrad's regional parliament, said the demands made by his party had influenced the decision to replace Boos. “This was a good example of how to make the authorities fear [the opposition],” he said.  He was not, however, convinced by the proposals for replacing Boos. He said the Communists would oppose all three candidates forwarded by United Russia because "as managers they are even weaker than Boos."  Revin said his party was especially upset with Savenko, who as Kaliningrad mayor had a statue of Lenin removed from the city's central square.

Lost Amber Room could be in Kaliningrad

The celebrated Amber Room, the crowning glory of the tsarist palace at Tsarskoye Selo near St Petersburg, could be hidden under a fortification in Kaliningrad.

Researchers in the Baltic enclave say they have made new discoveries which support the hypothesis that Nazi soldiers buried it there after looting the palace during World War 2. A key find was a dislodged metal label with the German inscription “amber treasures”.

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Kosovo Albanians losing faith in independence

The international opinion polls organisation Gallup published on 5 August a report Focus on Kosovo’s Independence, comparing current opinions in Kosovo and the region to those in the period just after its declaration of independence 2½ years ago.

It appeared from the report that Kosovo Albanians have been losing faith in their country’s recently declared independence, according to the poll by Gallup Balkan Monitor. The authors of the report wrote: “This reduction could have been due to the poor economic situation in the country rather than a feeling that independence had been a wrong step.”

In February 2008, following Kosovo’s declaration of independence, a Gallup poll had found 93% of ethnic Albanians thought independence had ‘turned out to be a good thing’.

But in a survey conducted in October 2009 this figure was only 74%. The figures from that survey were analysed following the advisory ruling by the International Court of Justice on Kosovo on 22 July that the state's unilateral declaration did not break international law. According to the study, citizens of Montenegro, Macedonia and Kosovo felt the Balkans had become less stable as a result of the Kosovo-Serbia dispute, a view shared by ethnic Albanian minorities in Montenegro and Macedonia.

However, 88% of respondents in Croatia and 77% in Albania said they believed independence had been positive for the region.

In Bosnia and Herzegovina, 58% of citizens of the Federation, formed of Croats and Bosnian Muslims, believed Kosovo’s independence had been good for the Balkans, while in the Serb-dominated Republika Srpska people were split, with 21% each saying that it had had a positive and negative impact.

But the majority of people in both ethnic entities believed Kosovo’s independence could constitute a precedent for other separatist movements. Certainly, in the Serb-dominated Republika Srpska, 43% of people agreed that Kosovo’s independence had cleared the way for the secession of their republic.

Both Serbs and Albanians in Kosovo appear also to have lost confidence in the idea that the two communities could live harmoniously together. Belief that there would be peaceful co-existence between ethnicities had fallen from 72% to 60% among ethnic Albanians and from 17% to 12% among Serbs. Among Kosovo Serbs, the proportion feeling insecure rose from 85% to 93%.

About two thirds of Serbs were also convinced the EU mission EULEX had not brought improvement in the rule of law and that EULEX was not doing a good job at maintaining security and stability in the territory. But ethnic Albanians in Kosovo were more supportive of the mission, with almost half saying that EULEX was better than its predecessor UNMIK and doing a good job.

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President signs off controversial insolvency law

President Valdis Zatlers finally signed on 11 August the Insolvency Law that the Saeima (parliament) passed on 26 July. The law will come into force on 1 November this year. Giving his reasons, Zatlers noted that the President’s Chancery had not received any petitions requesting that the law not be promulgated, and neither had the government. He considers the law endorsed by the Saeima as a compromise, and the president is pleased that the parliament has taken into consideration his proposed amendments.

The controversial Insolvency law passed by parliament is aimed to help borrowers who find themselves in trouble with their finances.

The law was not welcomed by banks. To cover expected losses due to the new law, borrowing rates will go up, a bank spokesman warned. The banks were extremely unhappy with the new regulation and would have to raise interest rates for new customers in order to cover expected losses. Bankers said this could slow down lending even more, and make recovery of the economy more complicated. Parliament approved Insolvency law in its first reading in June, but President Valdis Zatlers had then refused to sign it off until some amendments were agreed.

Latvia proves attractive to immigrants

Since the changes in the Immigration law were approved on 1 July, two requests have been accepted from foreigners for residence permission for five years, in exchange for buying real estate in Latvia for an amount that reaches 100,000 lats (equivalent to €142,800 euros). Both applicants are from Russia, the Department of Citizenship and Migration reported in mid August.

“There is no group of foreigners who would be welcomed with flowers. Special help is offered only for repatriates who emigrated from Latvia before May 1990. All the rest are responsible for themselves,” says the deputy head of the Citizenship and Migration department, Maira Roze.

In January of this year 50,785 residence permits, both permanent and temporary, were in effect. Although about half the number of permits that were handed out in 2008 were issued in 2009, interest is still high, says the office. Last year 2,388 residence permits were issued.

Most of the foreigners living in Latvia come from Russia, Ukraine, Belarus and the EU countries Lithuania, Germany and Estonia. Reasons given to migrate to Latvia are most often for family reunification, for study or for job opportunities in manufacturing industry or in social or individual services, and for real estate dealings, explained Maira Roze.

Juris Krumins, an economist and professor at the University of Latvia explained the trend. “Every country is interested in attracting qualified specialists from other countries, because they can therefore receive a skilled professional without investment in the educational process,” he suggested. There were some specific professions which could not be educated in Latvia, and for these foreign professionals were needed.

“Most of all immigrants in Latvia come from countries which have similar cultures. Therefore the integration process is easier in Latvia than it could be in some other countries,” added Professor Krumins. But he admitr6ted that a significant problem was the local language, which many immigrants cannot learn.

Foreigners who immigrate to Latvia legally were usually planning to stay there, not to move further to other EU countries, Maira Roze said. In contrast, any illegal immigrants found in Latvia were usually using Latvia as a transit country to move on to other EU countries. Most illegal immigrants come from Russia, Ukraine and Georgia.

Many employers have an interest in employing illegal immigrants because they can avoid paying taxes for them, and their salaries can be lower. There have also been hundreds of fake marriages - one of the most popular ways to get a residency permit.

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Finance Minister downplays sharp drop in FDI

On 11 August the Central Bank announced that the amount of foreign direct investment (FDI) in the first half of 2010 had dropped by some 89% compared with the same period in the previous year.

The Finance Minister and acting Prime Minister Ingrida Simonyte sought to downplay the recently released data. She said the 90% drop in FDI should be viewed in context. "The worst thing is that a bare figure often becomes a piece of news in Lithuania, but not arguments explaining it," she said in an interview with Ziniu radijas on 12 August. "One should have in mind that many other factors, namely that a significant investment was made at this very same time last year. The Polish group PKN Orlen purchased a considerable stake in the refinery from the government, which created a kind of hump in the investment flow," she said.

The minister instead preferred to focus on the improved GDP outlook for the year, driven by an increase in exports. "Based on a detailed analysis of export data, we see clear signs of a vigorous and rapid recovery of exports and if this trend continues we will see double-digit growth in 2010," she said.

Four die in weekend of storms

Four people died in the severe storms and floods that swept through Lithuania over the weekend of 7-8 August. The storms, which struck on the Saturday night, were centred around Kaunas, the second largest city in the region. They also left more than 8,000 people without electricity.

Two of those killed were camping when trees and branches fell down crushing them in their tents, where they were sheltering from the storm.

Kaunas mayor under crinimal investigation

The Mayor of Kaunas, Lithuania's second largest city, will be the subject of a criminal probe by the national prosecutor's office, the prosecutor announced in early August.

Mayor Andrius Kupcinskas is accused of falsifying city council vote records inorder to change disputed municipal policies.

The investigation was initiated by suspicions that the merger of two municipal hospitals, Kaunas Second Clinical Hospital and Kaunas Red Cross Hospital, was taking place even though the council had in April voted against the merger being proposed.

Lithuanian Government website

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Government lifts visa requirements for Russians

The government is to scrap the visa requirements for visitors from Russia over the summer in a bid to boost tourism in the country, according to reports in early August.

Visa requirements would be lifted until mid-October. Macedonia is the fourth state in the Balkans to drop its visa requirements for Russians during the tourist season in a bid to lure more holidaymakers. Russian tourists form a significant number of foreign visitors and holidaymakers in the Balkans region.

The Albanian government decided in May to allow visa-free access to all citizens of the Russian Federation between 30 May and 31 October for tourism and private visits for a period of up to 90 days.

Croatia announced in March it would continue its policy first implemented in 2009, allowing Russian tourists to visit the country without requiring visas, following a drop in tourism revenues of 11% in 2009.

Bulgaria, which is restricted by regulations of the European Union and the Schengen zone, eased its visa requirements for Russian tourists in June following protests by Bulgarian tourist organisations over the introduction of stricter and more complicated visa regulations.

Russia and Turkey signed an agreement around May for the mutual removal of visa requirements for the two countries’ citizens.

Macedonian Government website

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Black market uranium found in Chisinau garage

Interior ministry spokesman Chiril Motpan revealed on 25 August that police had seized 1.8 kg of uranium-238 found in a garage in Chisinau, the capital city, where it had been under guard and in a special container. He said there were seven suspects, some of whom had previous convictions for possessing radioactive materials in Moldova, Russia and Romania. Three members of the group, which included former police officers, have been arrested.

Uranium-238 is the most commonly found form of the substance, a naturally occurring form. The type needed for nuclear fuel and weapons is the less common uranium-235, which then needs to be enriched. Nevertheless, investigator Oleg Putintica told the Chisinau ProTV channel that the material could be used "both in the civilian nuclear industry and for military purposes to produce weapons of mass destruction". The suspects had reportedly been trying to sell the material on the European black market for €9 million (£7.4 million).

Russia bans wine imports from Moldova

According to an order circulated by its customs service in August, Russia has banned imports of wine from Moldova. In one of Europe's poorest and smallest nations winemaking accounts for about one-fifth of the economy and employs more than a quarter of all workers in the country. The Russian ban cuts off Moldova’s wine producers from their biggest market.

In a document sent to its border checkpoints. Russia's Federal Customs Service said it "hereby bans imports of the following products: wines … wine materials, cognacs produced in the Republic of Moldova." It cited concern about the quality of Moldovan wines, an issue that has been repeatedly voiced by Russia's Federal Consumer Protection Service.

Back in 2006 Russia had previously banned wine from both Georgia and Moldova, which have been traditional suppliers to the Russian market. There were then claims that Moscow was trying to punish new leaders in former Soviet republics by hitting at their most lucrative exports.

In this political context Gennady Onishchenko, the head of Russia’s Federal Service for Consumer Rights Protection, also on 30 July asked Belarus and Kazakhstan to ban wine and mineral water imports from Moldova and Georgia. He warned that Moldova that if it did not comply with Moscow’s safety standards for wine, saying that control over the quality of Moldovan wine was slipping after improving when the 2006 ban was lifted, and said the Moldovan government had demonstrated its "complete ineffectiveness".

Winemaking accounts for about one-fifth of Moldova’s gross domestic product and 28-30% of export revenues. About 20% of Moldovan wine goes to Russia.

Referendum on presidential election triggers coalition rivalry

In early August the leaders of two of the four parties in the coalition government have admitted they may run against each other in a direct presidential election.

The pro-western coalition ended in 2009 a decade of Communist Party rule and brought the country closer to the European Union. But there is obvious rivalry between Prime Minister Vlad Filat, chairman of the Liberal Democratic Party, and Democratic Party leader Marian Lupu, now acting President after the prolonged failure of Parliament to reach a constitutional majority to choose a new President.

Voters in Moldova will be asked in a referendum on 5 September whether they approve of amending the constitution so the next president will be elected by a nationwide popular vote. If voters say "yes" to the proposed change, presidential and parliamentary elections will probably be held simultaneously on 14 November.

Marian Lupu has twice failed to be elected as president by parliament. He was then the coalition’s joint candidate. He has hoped to run in that capacity in the next presidential vote. Prime Minister Filat, however, said in early August that Moldova needed a strong president "born out of political competition", not a president "made in a laboratory", a remark taken to be an allusion to Lupu's status as the compromise candidate of the four ruling parties.

The Constitutional Court ruled the same week that former President Vladimir Voronin, a popular veteran Communist, cannot run in the fall election because he has already served two consecutive terms.

Only former Defence Minister Valeriu Pasat, who wants to make Orthodox Christianity classes mandatory in schools, has yet formally declared his intention to run for president.

Polls show a substantial majority of Moldovans would endorse the constitutional change in the referendum scheduled for 5 September. Voters will be requested to decide on how the president should be elected. They will be asked to answer if they approve or disapprove of electing president by the whole nation.

In fact, before the previous constitutional reform in 2000, presidents in Moldova were elected by the direct vote of the citizens. Currently, according to the Constitution now in force, the head of state must be elected in the 101-member Parliament by minimum 61 votes. If both rounds of elections are unsuccessful, the incumbent president must then dissolve parliament, but only once in 12 months. This has left a divided parliament unable to elect a national president.

Links:

Country information and history
The Parliament of Moldova
Independent Moldovan website and news service

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Diver harpoons tourist

Towards the end of August a 28-year-old woman was seriously injured in the Montenegrin seaside town of Budva when a local diver shot her with a harpoon.

The woman was swimming some 20 metres from the shore when the harpoon pierced her left shoulder. She underwent complicated surgery in the nearby town of Kotor and her condition was reported now to be stable and non-life threatening.

The man who shot the harpoon was questioned by local police and released. Podgorica's Vijesti newspaper quoted eyewitnesses who said the injury had been an accident, and the man had immediately tried to help his victim.

Europe Minister submits action plans to fight corruption and organised crime

On 5 August the Montenegrin government formally submitted to the EU Delegation to Montenegro its strategy and action plan to combat corruption and organised crime. These are key documents in the country’s plans for accession to the EU.

Minister for European Integration, Gordana Đurović met with Leopold Maurer, the head of the EU Delegation, to submit the governmenbt’s strategy for 2010-2014 and its action plan for achieving its implementation over the next two years.

The European Commission will give its assessment on the documents as part of the Commission's opinion on Montenegro's application for EU membership. “The fight against organised crime and corruption is the first priority in the area of political criteria in the EU integration process” Leopold Maurer said. “A country wishing to join the EU needs to have an appropriate legal and institutional setup, effective preventive and law enforcement bodies, as well as an independent judiciary and prosecution. Progress in regard to the legal framework and the institutional set up has been made but further decisive action needs to be taken”.

Emphasising the key role of state institutions, which had primary responsibility in the fight against organised crime and corruption, Maurer also pointed out the important role of civil society organisations and the media. Only by working together in a constructive manner would the fight against organised crime and corruption become fully effective. The fight against organised crime and corruption will have to show further real results, he stressed. A solid track record of convictions in corruption cases remained to be established, particularly in cases of high-level corruption. In the process towards integration this must be an early priority.

Anti-corruption plan criticised for being drafted “too quickly”

In July Montenegro adopted a new anti-corruption strategy and action plan in the fight against corruption and organised crime. But the government has recently been facing criticism from representatives of non-governmental organisations, who have said they were not consulted.

Mreža za afirmaciju nevladinog sektora (MANS - The Network for Affirmation of the NGO Sector) called the new plan frivolous and unrealistic, as it had been drafted too quickly by the Minister for European Integration, Gordana Đurović.

MANS Director Vanja Ćalović said: "The reforms envisaged in the action plan will not be able to provide concrete results, because they are not based on real problems. The action plan was secretly written by Minister Đurović without the input of the working group members who were mandated to work on the document, and without a public debate."

The plan was drafted after the European Commission had on 17 July criticised the government's strategy to fight corruption and organised crime. The EC reportedly concluded that the plan lacked a main goal, deadlines and monitoring mechanisms.

The new draft includes measures to combat cyber crime, credit-card fraud and merchandise counterfeiting. The new framework is intended to boost Montenegro's co-operation with neighbouring countries and should foster region-based witness protection programmes.

Vanja Ćalović said that Đurović had drafted the action plan in only a week, while "the previous plans took a 10-member working group four months, more than 40 meetings, and a public debate."

In early August, Đurović gave the document to the EU delegation in Podgorica, as the EC prepares its opinion on Montenegro's readiness as an EU candidate.

The Montenegrin government submitted its EU membership application in December 2008 and hopes for candidate status by the beginning of 2011. The EC is expected to publish its opinion on Montenegro's readiness to acquire EU candidate status on 10 November along with its annual progress report on the country. In its 2009 progress report, the EC said that Montenegro had achieved significant progress in political reforms, but needed to strengthen the fight against corruption and organised crime.

Elizabeth Roberts: Realm of the Black Mountain - a history of Montenegro.  Hurst & Co. London 2007

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