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Plus, Hungary’s government hands a prestigious award to far-right figures and Balkan consumers struggle to avoid the debt whirlpool.by Ioana Caloianu, Ky Krauthamer, Richard Parrish, and Connor Zickgraf 19 March 2013
Russian political and business leaders reacted angrily 18 March to the Cypriot government’s planned levy on bank deposits.
President Vladimir Putin blasted the proposed move as "unfair, unprofessional and dangerous,” the Guardian writes.
The Wall Street Journal estimates that Russians own nearly 30 percent of deposits in Cypriot banks; Moody’s reckons Russian banks hold from $12 billion to $32 billion on the island and Russian companies another $19 billion, according to the Guardian.
The dependence by Russian banks and companies on a healthy Cypriot banking system helps explain statements like Putin’s and that of Prime Minister Dmitry Medvedev, who weighed in against the levy as “just like a confiscation of someone else’s money.”
The Cypriot government made its plan for the levy public 16 March after talks with the EU and the European Central Bank on a bailout for its heavily indebted banks. The first version called for a 9.9 percent charge on bank accounts totaling 100,000 euros ($130,000) or more and a 6.75 percent levy on smaller depositors, according to the Guardian. The charges were meant to raise some $7.5 billion for the bailout package, Bloomberg reports.
The levy was mooted partially to address the EU’s unease over the level of Russian deposits in Cypriot banks, the Guardian writes. Low corporate taxes and a loose regulatory climate, as well as relative ease of travel to the island for Russian citizens, have encouraged the outflow of capital from Russia to Cyprus.
At mid-day today Bloomberg reported the Cypriot parliament would likely reject the levy, while the government sought to make it more palatable by easing the charge on smaller depositors.
Former Romanian Prime Minister Adrian Nastase was granted early release and walked out of prison 18 March after serving nine months of his two-year prison sentence for corruption, according to Reuters. The highest-placed Romanian politician to be convicted on corruption charges since the end of communism, Nastase served as prime minister in a Social Democrat-led government from 2000 and 2004 and was defeated by current President Traian Basescu in the 2004 presidential race. His January 2012 conviction for illegally raising more than 2 million euros during his presidential campaign was hailed as a breakthrough for the country’s legal system.
The Romanian newspaper Gandul writes that Nastase’s conduct in prison, where he wrote several scholarly papers and mentored fellow inmates, aided his request for early release. However, the National Anti-Corruption Directorate contested the decision on the grounds that he showed no remorse. On the blog he maintained while in prison, Nastase proclaimed his innocence and blamed his conviction on Basescu and other political foes.
Gandul notes that Nastase is prohibited from taking part in political activity until 2016 and could face further criminal penalties at the conclusion of a case begun in 2006 over discrepancies in his wealth disclosure statements.
A prestigious state prize has been awarded to a Hungarian TV broadcaster with a reputation for making anti-Roma and anti-Semitic remarks, the BBC reports.
Echo TV is friendly to the government, EUObserver writes. Szaniszlo was fined by the Hungarian media regulator in 2011 for insulting the Roma. He is also said to discuss anti-Semitic conspiracy theories on his show, the website writes.
Tancsics awards were also given to an archeologist also alleged to have made anti-Semitic statements and a musician for a rock band close to the far-right Jobbik party.
Chechen strongman Ramzan Kadyrov recently discovered the photo-sharing site Instagram, posting images of himself posing with animals and hanging out with friends like Russian President Vladimir Putin.
Now he’s used the site to apologize for an outburst against a referee who sent off a player from his home team, Terek Grozny, of the Russian top soccer league, Radio Free Europe writes. But he insists he will not apologize to the “corrupt” referee in the 17 March match against Rubin Kazan.
After the referee sent off Terek player Rizvan Utsyev late in the game, Kadyrov commandeered the public address system to denounce him as a “donkey,” Reuters reports. The game ended in a 0-0 tie.
Kadyrov served as Terek’s president from 2004 until 2011. The team could now face a fine of up to 500,000 rubles ($16,000) or other sanctions.
The Russian soccer federation handed Terek a 500,000 ruble fine in 2011 for a fight in which a coach and a club official severely beat a player for the opposing team.
After five years of austerity budgets and sluggish economic performance in southeastern Europe, many households are falling deeper into debt, while others are choosing to save rather than spend, SETimes.com reports.
In Bosnia and Herzegovina, the average family debt has reached eight times the average monthly wage, economist Muris Circic said.
The executive secretary of a Bosnian banking association, Mijo Misic, told SETimes the rate of bad loans in the country stands at 12.7 percent, compared with 3.2 percent at the onset of the global downturn.
The website in September noted a sharp upturn in household savings in Albania and other countries.
Retail spending plunged in 2012 and savings rose – bank deposits increased by 10 percent in June alone – in what one banker sees as a sign of worry over constant political instability and the government’s financial weakness.
Bank deposits are also increasing in Romania, Serbia, and Montenegro as consumers delay major purchases.
As in Hungary, Poland, and elsewhere, many Balkan consumers took out Swiss-franc denominated bank loans, only to see repayments spike as their national currencies weakened. One Bucharest man told SETimes he had to take out a second loan to cover the installment payments on his first franc-denominated loan; in Serbia, discussions are under way over spreading the cost of ever-more expensive franc-pegged loans among consumers, banks, and the state.
In Croatia, where about a quarter of loans are pegged to the Swiss currency, 120,000 borrowers launched a suit against eight banks to limit their ability to charge variable interest rates on franc-denominated loans, Bloomberg Businessweek reported in December. Payments on such loans have risen by from 35 to 100 percent in Croatia, according to SETimes.
Now available! A new TOL e-book: "Crimea: The Anatomy of a Crisis" is a compilation of articles from TOL’s past coverage about Russia's annexation of Crimea, placed in the context of long-running disputes over the region. Find out also what's happened to Crimea and its people nearly a year after Russia's move shocked the international community.