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Also, Hungarian banks face a billion-euro loss on foreign-currency loans and Romania’s first brother is jailed for alleged criminal ties.by Barbara Frye, Mane Grigoryan, Rebecca Johnson, and Madeleine Stern 23 June 2014
Embarrassing new recordings of top-level officials in the Polish government have surfaced in the press, less than two weeks after a compromising conversation between the country’s central bank chief and finance minister was aired.
The revelations could lead Poland to early elections, although Prime Minister Donald Tusk has vowed not to resign as a result of the scandal, the Associated Press reported last week.
In one of the most potentially damaging of the exchanges, Foreign Minister Radek Sikorski allegedly tells then-Finance Minister Jacek Rostowski that Poland’s ties to the United States could actually damage the country, giving it a “false sense of security,” The Warsaw Voice reports.
Reports do not say when the recordings were allegedly made, but Rostowski was fired as finance minister in November, before the Ukraine crisis precipitated closer defense ties between the United States and Poland.
The existence of the alleged recordings was revealed on Polish radio and television 22 June and transcripts were to be published today in Wprost magazine.
On 14 June Wprost published transcripts of a conversation last year in which Marek Belka, governor of Poland’s central bank, told Interior Minister Bartlomiej Sienkiewicz that the bank could help the government on economic issues ahead of the 2015 elections if Rostowski were removed.
The exchange called into question the bank’s independence and resulted in calls for Belka to resign.
The Foreign Ministry declined comment on the new reports but did not deny that the remarks were made by Sikorski, according to the AP.
On the hunt for the source of the leaks, some officials suggest they come from “abroad,” which is “understood as a reference to Russia, whose relations with Poland have worsened due to Warsaw’s strong opposition to the Kremlin’s actions in Ukraine,” the news service writes.
Some officials have tried to overestimate the damage, and leaders of the country’s two ethnically determined regions – the Muslim and Croat-dominated Federation of Bosnia and Herzegovina and the predominantly Serb Republika Srpska – have disputed how the aid would be split. One source told Balkan Insight the two sides had “grudgingly agreed to 50-50 distribution of aid funds. However, this agreement has yet to be verified in public.”
An assessment compiled by the European Community Humanitarian Office (ECHO) with help from other international bodies estimated that damages will top 2 billion euros ($2.7 billion), although international officials said the report is incomplete in some areas due to a lack of solid baseline data and inflated damage estimates from some Bosnian government agencies, according to Balkan Insight.
The county is likely to receive much less than that in foreign aid – perhaps 300 million euros before October and “little more than a few hundred million euros” afterward, the news agency reports, quoting an unnamed senior Western diplomat.
Bosnia will host a donors’ conference in mid-July.
The ECHO assessment, issued last week, said floods and subsequent landslides destroyed 2,000 homes and damaged 75,000 more, forcing the evacuation of 10,000 people and displacing another 15,000. Numerous schools, roads, bridges, and other public facilities were wrecked.
“If local leaders fail to meet the needs of ordinary people, some of whom have been left without homes, food and pretty much everything else, we will very soon see a social explosion,” a senior international official who has participated in the emergency efforts told Balkan Insight.
Banks in Hungary are headed for another bath on foreign-currency mortgages, but it’s not clear how much they stand to lose.
The country’s supreme court ruled last week that an exchange rate spread – the difference between the rate applied when disbursing the loan and the one used to calculate repayments – was illegal and that banks would have to compensate borrowers accordingly. Ratings agency Moody’s estimates the tab to be about 1 billion euros ($1.36 billion), according to Reuters.
In addition, the government is moving to force banks to convert their foreign-currency mortgages to forint-denominated loans. That will involve about $15 billion worth of mortgages, mostly taken out in Swiss francs before the financial crash, Portfolio.hu reports. The forint has lost about one-fourth of its value against the euro since then and the loan repayments have become prohibitively expensive for some.
The government aims to reduce the repayments and fix them in forints.
Gergely Gulyas, a lawmaker with ruling Fidesz party who is helping to write legislation that would ban foreign-currency loans, “said the scale of the reduction in borrowers' payments had not been decided, adding that the state could in theory absorb some of the costs of this measure but that most would have to be covered by the banks,” according to Portfolio.hu.
Gulyas said the banks would be out about 400 billion forints ($1.77 billion), although he said the government had not done its own calculations and he was basing his estimates on press reports, according to the Budapest Business Journal.
Three years ago, the Hungarian government forced banks to allow foreign-currency mortgage holders to repay the loans in forints at below-market rates. Banks took a loss of more than 100 billion euros but were able to write some of that off on their taxes.
Hungary’s banks are mostly foreign-owned. Among those operating in the country are divisions of Belgium's KBC, Austria's Raiffeisen Bank and Erste Bank, Italy's UniCredit and Intesa Sanpaolo, and MKB Bank, a subsidiary of Germany’s BayernLB, according to Portfolio.hu.
The brother of Romanian President Traian Basescu has been placed under 30-day detention on influence-peddling charges, Hotnews.ro reports.
Basescu has acknowledged the video is genuine but says his remarks were taken out of context and that he has not committed any crime, the AP reports.
The Romanian opposition is calling for Traian Basescu to resign over the scandal, but the president denies any involvement and says he and his brother never discussed “backing Sandu Anghel in the trials he was facing,” Deutsche Welle reports.
Traian Basescu has said he will allow legal action against his brother to move forward and that he has not interfered with the case in any way.
“I can assure you that between the need to strengthen the judiciary and the natural urge to defend my brother I will always choose the former,” the president said, according to Deutsche Welle.
Leaders of the Polish Catholic Church have issued an apology to victims of molestation by priests, acknowledging that they ignored the problem for too long, the AP reports.
Addressing a 20 June Mass that followed the first day of a two-day conference in Krakow on preventing pedophilia and child abuse, Bishop Piotr Libera said Catholic leaders are “ashamed and repentant” and asked for forgiveness from God and the victims on behalf of the church.
Father Adam Zak, chairman of the Child Protection Center, said the Polish church is far behind its Irish and U.S. counterparts in fighting child sexual abuse, AFP reports.
The AP writes that about 30 priests have been convicted of pedophilia in Poland. According to Polskie Radio, Zak presented research at the conference indicating 19 Polish clergymen were convicted of sexually abusing children from 2010 to 2013. Zak said he intends to broaden his research to cover convictions since 1990.
Child-psychiatry and sexual-abuse experts from Germany and the United States, as well as abuse victims, attended the conference led by Cardinal Stanislaw Dziwisz, Krakow’s archbishop.
Dziwisz said it is “necessary to understand and confront this evil clearly and without hesitation,” Polskie Radio reports.
Public discussion of child abuse in the Polish Catholic Church has long been taboo, and priests generally received lenient punishment.
Poland has had a few high-profile cases come to light in the past few years, including that of Archbishop Jozef Wesolowski, who is accused of paying for sex with boys in the Dominican Republic while serving as papal envoy there.
But church leaders declared “zero tolerance” last year amid a backlash over comments by Archbishop Jozef Michalik, who suggested that sexual abuse may be more likely when children affected by divorce seek love outside the family.
“[The child] clings, it searches. It gets lost itself and then draws another person into this,” Michalik said. The church characterized his comment as a “slip of the tongue.”
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