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Ukraine Set for Visa-Free EU Travel, Albania Busts Trafficking Ring

Plus, Poland may speed up deployment of missile defense system, and Zagreb’s feud with Hungarian energy giant MOL deepens.

by Ioana Caloianu, Barbara Frye, Ky Krauthamer, and Lily Sieradzki 14 May 2014

1. Ukrainian lawmakers pass EU-friendly laws

 

Ukrainians could travel to the EU without visas by the end of the year, interim President Oleksandr Turchynov said 13 May after parliament adopted new laws to bring its legal system in line with EU norms, the Kyiv Post reports.

 

The laws relate to a ban on discrimination, regulating the office of the human rights commissioner, easing conditions for refugees, and anti-corruption measures.

 

timofti_350Moldovan President Nicolae Timofti and Council of Europe President Herman Van Rompuy met in Chisinau on 13 May. Moldova will sign an agreement with the EU on 27 June. Photo: Moldovan presidential website, presedinte.md

 

The EU has moved forward with negotiations on closer integration with both Ukraine and Moldova in the wake of Russia’s annexation of Crimea. Moldova earned the coveted visa-free regime 28 April and looks likely to sign a free trade and political association agreement in late June, after talks 13 May between Prime Minister Iurie Leanca and European Council President Herman Van Rompuy, The Associated Press reports.

 

Moldovan President Nicolae Timofti said his country would go ahead with the agreement in spite of external pressures, a reference to Russian rhetoric of recent weeks.

 

Earlier this week, Russian Deputy Prime Minister Dmitri Rogozin warned Chisinau not to sign the agreement with the EU, saying Moscow could “revise its economic ties” with the Eastern European country in retaliation. Russia is the main sponsor of the breakaway region of Transdniester, whose officials have asked to follow in Crimea’s footsteps and join Russia

 

2. Poland looks to missile defense, NATO for security

 

Stropnicky_100Martin Stropnicky
In response to Russia’s annexation of Crimea, Poland could be speeding up a plan to install a missile defense system on its territory, Reuters reports.

 

The government was originally to decide on a supplier for the system next year, but that was pushed up to late 2014. Now an executive with one of the firms in contention says the decision could be made by early summer, according to the news agency.

 

Marty Coyne of Lockheed said, “There’s clearly a sense of urgency.”

 

The system is slated to be in place by 2022 and could cost as much as 40 billion zlotys ($13 billion), including maintenance costs, according to Reuters.

 

Polish officials are nervous about Russian expansionism and have also called for a permanent NATO presence in the country, Reuters reported in April. The alliance has sent more troops and equipment to Central and Eastern Europe, including Poland, but so far only on a rotating basis.

 

“What is really important is the strengthening of NATO’s eastern flank,” said Polish Defense Minister Tomasz Siemoniak before meeting with his American counterpart, Chuck Hagel, last month.

 

Since November 2012, Poland has been host to 10 U.S. airmen at the Lask military airport about 100 miles southwest of Warsaw. Their numbers are augmented by “up to 200 visiting airmen conducting quarterly training rotations,” according to a dispatch from the U.S. Defense Department when the detachment was established.

 

Russia claims a significant NATO presence in Eastern Europe would violate a 1997 agreement between it and the alliance, but Siemoniak said Moscow’s action in Crimea has rendered that pact void.

 

Poland’s enthusiasm for Western troops is not matched by its neighbor, the Czech Republic, although Czech Defense Minister Martin Stropnicky told Reuters he would welcome more cooperation with NATO.

 

“Stropnicky said Czechs remained wary of any foreign troop presence as a hangover from the 1968 Soviet invasion of the former Czechoslovakia, even though any NATO forces would only come at the invitation of the Czech authorities,” Reuters writes.

 

3. Croatian economy minister accuses Hungary’s MOL of ruining flagship oil company

 

Ivan VrdoljakIvan Vrdoljak
Croatia is upping the pressure on the Hungarian energy company MOL in a lengthy dispute over its role in Croatia’s INA oil and gas company. Economy Minister Ivan Vrdoljak accused MOL 12 May of drastically cutting its investments in INA and said his country wanted a bigger say in running the company, Reuters reports.

 

MOL controls just over 49 percent of INA and Croatia owns about 45 percent.

 

The dispute is important for each side because the companies are among the biggest in their respective countries. A charge of taking a bribe from MOL to ensure it took a dominant position in INA led to a 10-year prison term for former Croatian Prime Minister Ivo Sanader. He is appealing the verdict at the Croatian Supreme Court.

 

MOL’s investments in INA fell from the equivalent of $800 million in 2009 to $176 million in 2012, Vrdoljak said.

 

“In the last five years INA’s business was harmed and I reproach our colleagues in MOL for declining to talk about corporate management in INA,” Vrdoljak said.

 

The minister based his remarks on an analysis by energy consultants A.T. Kearney and Croatia’s Oil and Gas Consulting, according to Bloomberg Businessweek, which quotes him as saying the analysis “shows that INA in the past five years has been subjected to destruction.”

 

MOL shot back 13 May calling the analysis “shameful,” inaccurate, and biased, the Budapest Business Journal reports.

 

MOL communications director Dominic Kofner said the report erroneously puts INA’s share of the Croatian GDP at 9.4 percent rather than the true figure of 2 to 3 percent. He also noted that Oil and Gas Consulting’s director, Jasminko Umicevic, used to be a manager at INA.

 

The Hungarian government owns around 25 percent of MOL, the country’s largest company with revenues of $24.6 billion in 2012.

 

INA, Croatia’s fourth-largest employer, reported a net loss of $268 million in 2013, compared with a profit of $123 million in 2012, Bloomberg reported. Revenue fell 8 percent to $4.9 billion.

 

4. Albanian police bust trafficking ring

 

Albanian authorities announced the arrests of 15 people suspected of trafficking people to the United States, the AP reports.

 

The trafficking ring operated mainly from Tirana and the northern city of Shkoder, Albanian police said 12 May. The suspects allegedly charged $20,000 to smuggle people to the United States and provide false entry documents, according to the AP.

 

The ring smuggled more than 50 people into the United States via Bulgaria, Italy, or Spain, and finally Mexico.

 

The arrests capped a four-month joint investigation between Albanian and U.S. law enforcement, Balkan Insight reports.

 

A spokesman for the Albanian prosecutor general’s office said the investigation remains open, the AP writes. One suspect is still at large.

 

According to the U.S. State Department’s 2013 Trafficking in Persons Report, Albania has failed to “fully comply with the minimum standards for the elimination of trafficking.” The report cites insufficient funding for NGO-run shelters, uncoordinated and untrained police forces, and punishment of trafficking victims on prostitution charges.

 

In addition, the report states that Albania’s Serious Crimes Prosecution office investigated only 11 human trafficking suspects in 2012, down from 27 suspects in 2011.

 

A 2012 report by the International Labor Organization estimated that Central and southeastern Europe excluding EU countries has the highest rate of forced labor, including human trafficking, in the world, with 4.2 victims per 1,000 inhabitants.

 

5. Hungarians, Croatians among highest-taxed EU residents

 

Consumers in Europe already know they pay high rates of VAT for most goods and services. But citizens of some less well-off EU countries in the south and east may not know they pay some of the highest rates in the union. And the rates are likely to rise further as governments shift more of the tax burden to this relatively hard-to-evade form of taxation, auditors KPMG report in the 2014 edition of their Corporate and Indirect Tax Rate Survey.

 

Of the 13 countries that increased VAT rates between 2012 and 2014, seven are in Europe and only one of those is not an EU member. European countries generally have quite high rates of VAT, while corporate taxes vary widely: at 33 percent, corporate taxes in France and Belgium are among the highest in the world, while Montenegro, Bosnia, and Bulgaria have the lowest.

 

In the EU, some poor members have some of the highest VAT rates. Hungary has the highest rate in the union and the world, 27 percent, and Croatia’s is 25 percent. EU law sets the minimum VAT at 15 percent, with members permitted to set lower rates for certain goods and services.

 

Paul Suchar of KPMG’s Croatian office said the country’s high VAT reflects the global trend to indirect taxation, according to Dalje.com.

 

The poorer, non-EU countries of Europe tend to have very low rates of corporate tax, probably as incentives for foreign investment in their starved economies, although wealthier countries such as Ireland and Switzerland also keep corporate taxes enticingly low. 

Ioana Caloianu is a TOL editorial assistant. Barbara Frye is TOL's managing editor. Ky Krauthamer is a senior editor at TOL. Lily Sieradzki is a TOL editorial intern.
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