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Russia Puts Hold on Ukraine Loan, Poland Turns to Nukes

Plus, Kazakhstan eyes sweeping anti-strike legislation and Croatia tightens its belt under EU pressure.

by Barbara Frye, Ioana Caloianu, Karlo Marinovic, and Aliona Kachkan 30 January 2014

1. Russia suspends aid to Ukraine pending a new government


In the wake of the resignation of Ukraine’s prime minister, the Russian government has opted to wait to release more aid to its western neighbor until a new Ukrainian government is formed, Bloomberg reports.


The funds are critical to keep Ukraine from defaulting on its debts. Moscow approved a $15 billion loan to Kyiv in December and has released $3 billion so far, Bloomberg writes. Russian President Vladimir Putin had said earlier this week his country would release the money even if Ukraine’s opposition formed the new government, but yesterday Moscow adopted a wait-and-see approach, The New York Times reports.


Further ratcheting up the pressure, Russian Prime Minister Dmitri Medvedev has complained that Kyiv is not paying its bills to Gazprom, even after the Russian energy giant dropped prices for Ukraine, and customs agents are stepping up detailed inspections of shipments of Ukrainian goods into Russia, Bloomberg writes.


Ukrainian protesters have rejected a deal with the government that would essentially free those imprisoned during the two months of unrest in exchange for activists clearing out of occupied government buildings and a main street in the capital within 15 days, Radio Free Europe reports.


Opposition leader Vitali Klitschko said the move was akin to the government holding “hostages.” RFE also reports that “rival vigilante groups” are forming across the country, with some aimed at preventing protesters from occupying public buildings and others aimed at protecting those who do so.


2. Two nuclear plants planned for coal-reliant Poland


The Polish government has approved plans to build two nuclear plants in the next two decades, Polskie Radio reports.


The first plant should be running by 2024 and the second by 2035, according to the news agency. Officials are still trying to decide on a location, but most of those in the running have been in the north and have met with “considerable opposition,” according to Polskie Radio.


The turn to nuclear is one way to reduce the use of coal, which is plentiful in Poland and generates about 90 percent of the country’s electricity. Coal’s dominance has put Poland in conflict with the EU’s goal of reducing greenhouse-gas emissions by 20 percent in the next six years.


Each planned nuclear plant would generate up to 3,000 megawatts of electricity, about one-tenth of the country’s current installed capacity.


The first plant to go up will be built by a joint venture of utilities and a mining firm, all owned by the government, according to the World Nuclear Association. In the next two decades, energy company PGE aims to shift away from a near-total dependence on coal for generating electricity to a mix of 38 percent coal, 36 percent nuclear power, 11 percent natural gas, and 14 percent renewables, the association says.


3. Kazakhstan poised to adopt onerous strike law


Legislators in Kazakhstan are considering a bill that would assess crippling penalties on those participating in illegal strikes, Radio Free Europe reports.


The measure would leave it to compliant courts to determine if a strike is illegal and calls for a fine of $10,000 and/or enforced labor or a prison sentence of up to three years for participants. It would also penalize those who come to the aid of strikers, in a provision that outlaws “leading [or] participating in the activities of an unregistered or banned public [or] religious association, as well as financing their activities,” according to RFE. 


Demonstrations in Zhanaozen in December 2011. Image from a video by 1612TV/YouTube.


The news agency says the bill is aimed at preventing another outbreak of labor unrest like that in the western city of Zhanaozen in December 2011. Oil workers there struck over pay and benefits, and, by some reports, demanded precedence over their Chinese co-workers. Their employer, Karazhanbasmunai, had a combined Chinese-Kazakhstani leadership. The strike culminated in a deadly clash between police and workers that killed more than two dozen people.


“The government’s revision of the criminal code currently under way comes amid a broader crackdown on freedom of expression, assembly, religion, and association” following the strife in  Zhanaozen, Human Rights Watch wrote in a September 2013 letter to Kazakhstan’s prosecutor general, who was reviewing the legislation at the time.


Since then, the organization wrote, authorities “have imprisoned outspoken government critics and closed independent and opposition newspapers, claiming that their activities are ‘extremist’ in nature.”


4. Croatia uses taxes, pension funds, cuts to close budget hole


Croatian Finance Minister Slavko Linic said the government will take control of some firefighters’, police officers’, and soldiers’ retirement funds to help fulfill an EU demand that it cut its budget deficit, government-owned Croatian Radio and Television (HRT) reports.


Slavko Linic
Over the next few years, Croatia aims to cut its deficit from the current 6.4 percent of GDP – more than twice that allowed by EU criteria – to 2.4 percent. To do that, it will reduce spending by about 3.6 billion kunas ($643 million) and raise an additional 4.7 billion kunas in new revenues, according to HRT.


Brussels also wants the country to tackle its public debt, which stands above the EU-permitted 60 percent of economic output.


“It will be essential for Croatia to take decisive action,” said Olli Rehn, the EU’s commissioner for economic and monetary policy, the Associated Press reports. “A clear path is set out for restoring sustainability.”


In addition to transferring pension contributions of some public workers from private to public systems, Linic said the government would introduce taxes on savings interest, property, and capital gains, and expand the levy on lottery winnings. It is also eyeing profits from state-owned companies and “unused funds from various state institutions and agencies,” Jutarnji List reports.


Croatia’s economy has shrunk by 12 percent since its pre-crisis peak in 2008 and the unemployment rate is nearly 19 percent, according to the AP.


Prime Minister Zoran Milanovic said the EU-mandated cuts should be seen as a mechanism to help Croatia reform its economy. He announced cost-cutting changes to the health care, education, and judicial systems and a restructuring of public services and the management of state assets, Al Jazeera reports.


5. Montenegro abandons cash-for-citizenship scheme


Bowing to pressure from the EU, Montenegro has scrapped a provision allowing foreigners investing in the country to apply for citizenship, the Times of Malta reports. Adopted in 2010 but never implemented, the country's Citizenship Act enabled foreigners who invested at least 500,000 euros ($683,000) to become Montenegrin nationals.


A spokesman for the government said the measure is unlikely to be revived, the newspaper reports.


Montenegro started accession negotiations with the EU in June 2012. When the country joins the bloc, its citizens will have free access to travel, and eventually to work, throughout the EU.


Brussels has said Montenegro needs to show progress in fighting corruption and organized crime before becoming a member state. Some fear that in Latvia, which makes a similar offer to foreign property buyers, the cash-for-citizenship program has served as a screen for money laundering by Russian-speaking oligarchs holding assets in Latvian banks, raising concerns about its connection to public corruption.


Russians have been among the most avid foreign purchasers of real estate in Montenegro, The St. Petersburg Times recently reported.


Jelena Dzankic, an expert in citizenship programs at the European University Institute, told the Times of Malta that Montenegro was not willing to “risk a negative assessment” from the EU. Although member states can decide on citizenship issues, “questions of corruption and security can be used as leverage by the EU to exert pressure on accession countries to put such schemes on hold,” she said.


EU member Malta will next month start offering foreigners citizenship in exchange for as little as 880,000 euros with no residence requirement. And last year, Cyprus cut the cost of its economic citizenship in an effort to placate Russians who invested heavily in the small country and incurred significant losses after the collapse of Cypriot banks.   

Barbara Frye is TOL's managing editor. Ioana Caloianu is a TOL editorial assistant. Karlo Marinovic and Aliona Kachkan are TOL editorial interns.
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