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Russia Declares Ukrainian Refugee Emergency, Serbia’s Thwarted Finance Minister Quits

Plus Russia to liberalize its airline industry and record Georgian drugs bust

by Piers Lawson, Ioana Caloianu, Mane Grigoryan, and Madeleine Stern 14 July 2014

1. Refugee influx prompts state of emergency in parts of Russia


The number of refugees fleeing fighting in Ukraine and living in temporary shelters is approaching 24,000 people, ITAR-TASS reports.


As a result, what the news agency calls six Russian regions bordering Ukraine declared a state of emergency last week.


It counts among those regions the Crimean port city of Sevastopol, which is still internationally recognized as Ukrainian territory.


Refugees are flowing into Crimea and the Rostov region, from where they are taken to other parts of Russia, according to ITAR-TASS. Other regions under the “emergency situation regime” are Volgograd, Astrakhan, and parts of Stavropol and Karachay-Cherkessia.


The Russian government is providing medical assistance and a hotline for refugees to call for “comprehensive help,” which has so far logged more than 3,000 inquiries, said Alexander Drobyshevsky, spokesman for the Emergency Situations Ministry, according to ITAR-TASS.


On 13 July, Russia warned of "irreversible consequences" after a man was killed on its side of the border allegedly by a shell fired from Ukraine, Radio Free Europe reports.


President Vladimir Putin expressed “grave concern” over the incident, RFE reports, citing a Kremlin spokesman.


The shell hit the courtyard of a house “in a small Russian border town,” reports the BBC, which says the Ukrainian government has denied firing shells on Russian territory.


“More than 1,000 civilians and combatants are believed to have died in the fighting since April,” the BBC says, reporting that the latest clashes are taking place outside the rebel-held eastern Ukrainian city of Luhansk.


2. Serbia’s finance minister quits over slow pace of reforms


Serbian Finance Minister Lazar Krstic resigned on 12 July after he and Prime Minister Aleksandar Vucic disagreed over the pace of economic reforms, Bloomberg reports.


Lazar Krstic
Krstic, 29, announced his resignation after the government “adopted a raft of changes to labor and pension laws,” including raising the retirement age for women and loosening employment laws, Reuters reports.


But the prime minister balked at Krstic’s argument that more radical reforms were required to rein in public spending and attract investment.


Among other changes Krstic pushed, according to Reuters, were pension cuts of at least 20 percent, public sector wage cuts of at least 15 percent, a 30 percent hike in electricity tariffs, and the firings of at least 160,000 of Serbia's roughly 700,000 public sector workers over the next two years.


“Krstic's sudden departure will likely rattle investor nerves over whether the government can follow through on its promises of radical reform,” according to Reuters.


Foreign direct investment in Serbia has seesawed in recent years. It averaged about $3 billion annually before the financial crisis, hit a low of $365 million in 2012, and climbed back above $1 billion in 2013, according to the UN Conference on Trade and Development.


The minister’s resignation comes as the country’s economy is under renewed strain.


“Serbia is facing a third recession in five years after the worst rainfall in more than a century wrecked the Balkan nation’s power plants and soaked farms in May,” Bloomberg notes.


The country is also laboring under a budget deficit of 8.7 percent of gross domestic product, the highest in Europe, and an unemployment rate of about 24 percent, with half of the country’s young people without jobs, according to Bloomberg.


Vucic warned that Serbia could go bankrupt by March barring urgent economic reforms, Bloomberg reports.


Krstic’s resignation also comes as unions walked out on talks with the government and announced protests over a new labor law expected to come before parliament on 15 July, Balkan Insight reports.


3. Russia prepares to drop regulatory hurdles to low-cost air traffic


Regulations governing the airline industry in Russia may be liberalized soon, opening the door to a significant increase in low-cost air travel in the country, Reuters reports.


The changes will be made in preparation for this year’s launch of Dobrolet, a low-cost subsidiary of the Russian flag carrier, Aeroflot.


With Dobrolet, Aeroflot hopes to emulate the success of Western low-cost carriers. Photo by Andrew W. Sieber/flickr.


The Russian government has repealed several airline industry regulations that have kept fares high in Russia, including bans on the sale of non-refundable tickets and the hiring of foreign pilots by Russian carriers.


All Russian-operated flights are still required to provide passengers with food and allow them free checked baggage.


But Aeroflot Chief Executive Vitali Saveliev told Reuters he expects these regulations to be relaxed soon as well.


“These are the laws that will allow Russia to have low-cost airlines that will operate under the same rules as those in Europe and America,” Saveliev said.


"Low-cost, it is a very simple service – no food and no free-of-charge luggage.”


Aeroflot, which underwent a major branding overhaul and replaced most of its aging Soviet fleet with Western-built aircraft after the breakup of the Soviet Union, has since enjoyed considerable commercial success, ranking as the 10th most profitable airline in the world in 2011.


Together, Aeroflot and Dobrolet hope to carry 70 million passengers a year by 2025, Saveliev told Reuters.


“People now prefer to fly either premium class or with low-cost carriers,” he said. “That’s why in Russia we are going to be ready, because we now have this low-cost carrier.”


4. Georgia seizes massive quantity of liquid heroin


Georgian border guards have confiscated almost three tons of liquid heroin, which they discovered hidden in cargo from Azerbaijan heading to Turkey, reports.


It was the biggest-ever drug seizure in Georgia, the Interior Ministry said, according to the website.


Police found 93 barrels of liquid soap canisters, filled with 80 percent pure heroin, reports, amounting to a total of 2.7 tons of the illicit substance, worth several hundred million dollars.


The South Caucasian country is a transit route for illegal substances produced in other countries according to a recent International Narcotics Control Strategy report by the U.S. State Department.


Most of the drugs smuggled though Azerbaijan and Georgia originate from Afghanistan and Iran and are destined for Western Europe, Russia, and Turkey.


A recent uptick in seizures demonstrated “the increasingly high priority placed on narcotics interdiction by the current Georgian government,” according to the report.


An investigation had been launched regarding the latest seizure and two Georgian citizens have been detained, according to


5. Map gives a peek at the Czech Republic’s gambling problem


A new online map shows more than 100 illegal gambling venues in the Czech Republic, although the group that created it says the real number is above 1,000, according to the Czech Press Agency (CTK).


The figures come from a gambling trade group, the Czech Association of Central Lottery System Operators (SPELOS), whose managing director blamed overzealous local regulators for driving the trade underground.


Petr Vrzan said the “illegal business is largely booming at places where Town Halls went too far with the regulation of gambling or that have a zero tolerance of legal lotteries,” CTK reports.


More than 10,000 venues are under “administrative procedures” to have their video lottery licenses revoked, and the number of gaming facilities in the country has dropped from 61,026 at the end of 2013 to 59,000 in March, CTK reports, citing Finance Ministry data.


CTK notes that the country’s income from gambling more than doubled from 36 billion crowns in 2008 to 88 billion crowns in 2012.


The Czech Republic was estimated in 2012 to have “the second highest number of gambling machines per capita in the world – second only to Japan,” according to Matej Hollan, chairman of the anti-gambling Brneni Association, the Epoch Times reported at the time.


Karel Nespor, a Czech specialist on addiction diseases, told the website he estimated there were about 500,000 “pathological gamblers” in the Czech Republic, which has a population of 10 million.


“But that is of course an estimate. I can’t fully substantiate it,” Nespor said. 

Piers Lawson is a TOL contributing editor. Ioana Caloianu is a TOL editorial assistant. Mane Grigoryan and Madeleine Stern are TOL editorial interns.
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