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Plus, Bulgaria turns over supervision of banks to the EU and Russia announces big plans for a Siberian railway.by Ky Krauthamer, Barbara Frye, Ioana Caloianu, and Mane Grigoryan 15 July 2014
The winner of Slovenian’s early general election, political newcomer Miro Cerar, may reconsider an economic reform plan the previous government hammered out with the EU, according to Reuters.
Cerar’s center-left SMC party, formed just six weeks ago, won 34.8 percent in the 13 July balloting and is expected to form a coalition with smaller parties to the left of the political spectrum.
The prospective new prime minister, a 50-year-old law professor and son of a famous gymnast, is hostile to a key plank in the reform plan that calls for the privatization of large companies to raise revenue for the cash-starved budget, Reuters writes.
Slovenia has struggled to regain economic momentum since the 2008-2009 downturn and has been mired in political turmoil, with the last two governments collapsing. Former Prime Minister Janez Jansa’s center-right coalition fell in February 2013 amid corruption allegations, in connection with which Jansa is now serving a two-year prison sentence. His successor, Alenka Bratusek, gave up the premiership last April after losing the leadership of her center-left Positive Slovenia party, prompting early elections. Cerar said he was willing to cooperate with all parties except Jansa’s Slovenian Democratic Party, which won 20 percent of the vote, Slovenian public broadcaster RTV reports.
Bratusek’s outgoing government put the privatization program on hold pending the outcome of the elections, Reuters writes. Cerar has come out against selling off assets such as as Telekom Slovenia and the Ljubljana airport.
An editor of Russian-language newspapers in eastern Ukraine who was seized last month has been found dead in a park in Dnipropetrovsk, The Moscow Times reports, citing a social media post by the leader of a pro-separatist movement.
Sergei Dolgov disappeared in mid-June when armed men dragged him from the office of Vestnik Priazovya, the Moscow paper writes, citing i24.com.ua, a Mariupol news site. The site also reported that Serhiy Spasitel, head of the Mariupol branch of Ukraine’s Security Service, said a few days after the abduction “that Dolgov was alive and well, but that questions about his specific whereabouts should be addressed to Ukraine’s Anti-Terror Center.”
Mariupol prosecutor Serhiy Reznitsky said he did not know where Dolgov was, adding that police and prosecutors “do not always know what is happening” at the Anti-Terror Center, i24.com.ua reported, according to The Moscow Times.
Dunja Mijatovic, the OSCE’s media freedom envoy, said in 28 June statement that “Dolgov was allegedly beaten and detained by the Ukrainian Security Service.” Mijatovic also expressed concern over what she said were attempts by the separatist “Donetsk People’s Republic” to force media to register with authorities of the self-proclaimed state “and to report in favor of the illegal armed groups.”
A recent Amnesty International report on torture and abductions in eastern Ukraine asserted that government forces as well as rebel groups were responsible for a number of abuses.
As the Bulgarian government takes steps to close a troubled bank, it will ask the European Union’s banking watchdog to supervise its banking industry, Reuters reports.
Bulgaria’s decision to join the EU’s Single Supervisory Mechanism makes it the first country outside the euro zone to do so, the news service notes. EU supervisors carry out so-called stress tests to determine if banks have sufficient capital and oversee, directly or indirectly, thousands of European financial institutions.
Bulgaria’s central bank announced Friday that it has revoked the license of Corporate Commercial Bank (KTB), weeks after rumors of wrongdoing there set off a panic that had depositors lining up to withdraw their money, Novinite reports. A proposed government takeover of KTB was dropped when an audit released last week said about 3.5 billion leva ($2.4 billion) had gone missing from the bank.
Instead, the central bank will transfer KTB’s assets to one of its subsidiaries, which in turn will be nationalized, and where deposits of up to 100,000 euros ($136,000) will be insured, Novinite notes. It is unclear whether deposits over that amount will be protected, Reuters writes.
The audit said KTB’s major shareholder, Tsvetan Vassilev, withdrew nearly 206 million leva from the bank through a “third person,” according to Novinite. The central bank said the inspection turned up evidence of “actions that are incompatible with the law and good banking practices” and that the audit would be handed over to prosecutors.
Russian Prime Minister Dmitry Medvedev has ordered regional and municipal government bodies to buy only domestically produced vehicles, according to Bloomberg.
“The state buys a lot; the budget allocates enormous resources for the purchase of goods and services,” Medvedev said in a 14 July statement. “It’s better if these resources go to local companies rather than foreign producers in cases when local companies are able to compete with foreign producers based on quality and price.”
The rule will apply to dignitaries’ cars, public transport vehicles, and service vehicles. Foreign brands can still be purchased if they meet requirements to manufacture or assemble vehicles in Russian plants.
“The localization loophole means that not all car makers will be struck. Audi, BMW, and Ford are among the brands with assembly lines in Russia. Mercedes, however, does not produce its vehicles domestically,” The Moscow Times writes.
The order is meant to boost Russian carmakers out of a bad patch, Bloomberg writes. Car sales have been hit by the weakening ruble, and AvtoVAZ, the biggest domestic maker, will cut jobs by almost a fifth this year.
Russian President Vladimir Putin opened a major expansion of the Baikal-Amur Mainline (BAM) railroad 9 July, saying the more than 2,000-mile line would help revitalize Siberia’s economy, Itar-TASS reports.
Doubts were raised about the usefulness of the 40-year-old railway in the aftermath of the Soviet Union’s collapse, but Putin said that by the early 2000s “it became obvious that the BAM was highly needed, and its capacity was already not enough,” the news agency writes.
The government will allocate up to 150 billion rubles ($4.4 billion) from Russia’s oil and gas fund to modernize both BAM and the Trans-Siberian Railway, Itar-TASS reports, with the target of increasing BAM’s capacity sixfold from the current 12 million tons of freight per year.
Work on the line began in the 1930s using forced labor. After a 20-year pause following the death of Joseph Stalin, the project was renewed in the 1970s by Soviet leader Leonid Brezhnev, this time relying on enthusiastic young people rather than gulag prisoners. “Tens of thousands responded to his call for volunteer workers to move to the region,” Global Rail News writes.
Construction of the line, which roughly parallels the eastern half of the Trans-Siberian to the north, involved crossing six mountain ridges and building more than 2,000 bridges, according to Itar-TASS. Increasing the line’s capacity will drive development of the region, Mikhail Klimkin, the director of a transport institute at the Higher School of Economics in Moscow, told the news agency.
BAM’s current capacity “is disastrously insufficient, considering the growth in the exports of coal, ore, and timber in the eastern direction to Asia-Pacific countries,” Klimkin said.
“The entire infrastructure of the cities east of the Urals relies on this railway and if we want to maintain these regions at the current level, to say nothing of their development, this infrastructure should be preserved,” said Konstantin Trofimenko, director of the Higher School of Economics’ Center for Urban Transportation Studies.
Experts also say a modernized BAM “would have limited potential to compete with Chinese sea ports and draw an inflow of goods currently supplied from China to Europe,” Itar-TASS writes.