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Blame, Investigations Begin in Airliner Crash, Slovenia Loses 20-Year Bank Dispute

Plus, Hungary tries to get its fiscal house in order and Montenegro arrests journalist's alleged attackers.

by S. Adam Cardais, Ioana Caloianu, and Mane Grigoryan 18 July 2014

1. Investigations, blaming begin in airliner crash


Accusations of responsibility are flying around as it looks increasingly likely that Malaysia Airlines flight MH17, which crashed over Ukraine yesterday, was shot down.


The Boeing 777 crashed 17 July in the battle-torn region of Donetsk killing all 298 people on board. An adviser to Ukraine’s Interior Minister told The Wall Street Journal the plane was shot down by surface-to-air missiles launched by separatist rebels near the Russian border. Sources in Russian media are saying the rebels do not possess that type of missile system and are pointing the blame at the Ukrainian military.


The plane was a passenger aircraft flying from Amsterdam to Kuala Lumpur with 283 passengers and 15 crew members.


The Kyiv-appointed governor of the Donetsk region had said Ukrainian investigators were being kept from the crash site by pro-Russia rebels, but today separatists agreed to let Ukrainian and international investigators into the area after a conference with representatives of the Organization for Security and Cooperation in Europe, The Journal reports.


Malaysian Prime Minister Najib Razak said the commercial aircraft was not flying over restricted airspace and there were no distress signals before the crash.

“If it transpires that the plane was indeed shot down, we insist that the perpetrators must swiftly be brought to justice,” he said, according to The Journal.


“This incident occurred in the context of a crisis in Ukraine that is fuelled by Russian support for the separatists, including through arms, material, and training,” the White House said in a statement, The Journal reports.


For his part, Russian President Vladimir Putin said the Ukrainian government bore responsibility for the tragedy after resuming “hostilities” in the region. The government ended a cease-fire nearly three weeks ago.


The vice president of Malaysia Airlines said the plane carried 154 Dutch citizens, 27 Australians, 23 Malaysians, 11 Indians, six Britons, four Germans, three Filipinos and one Canadian, according to The Journal. There were another 47 passengers whose nationality had not been confirmed.


2. Slovenia liable for Yugoslav-era bank losses, Strasbourg court says


Slovenia’s struggling public finances took another hit this week after a European court ruled that it must repay hundreds of millions of dollars in lost savings from a defunct Yugoslav-era bank, Reuters reports.


On 17 July, Slovenia said it would comply with the European Court of Human Rights’ order that it reimburse depositors who lost their savings in the liquidation and asset transfer of Ljubljanska Banka in the 1990s. The state has a year to pay liabilities that could total between 300 million euros ($406 million) and 500 million euros, Reuters reports.


The result of 20 years of litigation, the ruling comes months after Slovenia spent 3.2 billion euros shoring up a banking industry that drove the country to the brink of an international bailout last year due to billions in bad loans, Bloomberg points out.


“The move drove the budget deficit to 15 percent of annual output – five times the European Union limit – less than a year after [Slovenia] emerged from its longest-ever recession,” Bloomberg writes.


Citing an economic analyst, Bloomberg reports that the presumptive new government of Miro Cerar, a political newcomer whose center-left SMC party won parliamentary elections 13 July, will have to break a campaign promise by raising taxes or cutting public-sector wages to cover the liabilities.


In the 1970s, Ljubljanska Banka received savings from all over Yugoslavia. The bank was liquidated in the early 1990s after Slovenia split with Yugoslavia. In 1994, its assets, but not its liabilities, were taken over by state-owned Nova Ljubljanska Banka, leaving existing customers with no way to withdraw their money.


Balkan Insight reports that the Strasbourg-based court’s ruling this week confirms a 2012 first-instance verdict that the Slovenian government must repay two of the former bank’s Bosnian depositors who had sued. The judgment is interpreted as applying to all depositors in a similar situation – or nearly 300,000 people, according to Balkan Insight.


The ruling affects only individual savers, but Bloomberg says it might have ramifications for the roughly 300 million euros in lost deposits the Croatian government took over from citizens and is trying to recover, Bloomberg reports.


Croatian Prime Minister Zoran Milanovic called the verdict “just.”


3. Under EU pressure, Hungary launches spending freeze


Budapest is freezing spending at several government institutions in an effort to get back in the European Union’s fiscal good graces, The Wall Street Journal reports.

On 17 July, the government said it was withholding 110 billion forints ($480 million), or roughly 0.3 percent to 0.4 percent of GDP, until November at the earliest. Social programs won’t be affected, Economy Minister Mihaly Varga told an economics conference.


Mihaly Varga
While Hungary’s budget deficit is under the EU-mandated cap of 3 percent of GDP, Brussels warned Budapest last month that its public debt – the highest in Central Europe at around 80 percent of GDP – could drive up the deficit. If so, the EU would relaunch its “excessive deficit procedure,” a type of budget surveillance that Hungary only emerged from in 2013 and can lead to financial penalties.


In 2012, Brussels threatened to withhold some 500 million euros if Budapest didn’t lower the deficit.


“We’ll do whatever is necessary so that we won’t return to the excessive deficit procedure and thus stop receiving EU funds,” Varga said at the conference, The Journal reports.


This is a very different tune from last month, when Varga said Hungary was at no risk of returning to the EU’s budget surveillance. Varga added on 17 July that the government remains committed to keeping the 2014 deficit at the planned 2.9 percent of GDP.


4. Montenegro makes arrests in 2007 journalist attack


Two suspects have been arrested in a high profile, unsolved attack on a Montenegrin reporter, in a government crackdown on violence against journalists, Balkan Insight reports.


Softic_100Tufic Softic

On 17 July, police detained Vladimir Labudovic and Ivan Asanovic in connection with the attack of Tufik Softic, a journalist who was beaten by hooded assailants outside his home in November 2007. The men face charges of attempted murder, according to Balkan Insight.


At the time of the attack, Softic reported for an independent daily. Now with the prominent opposition-oriented Vijesti newspaper, he is a frequent target of violence. In August, unknown assailants detonated a bomb outside Softic’s home while he was inside. In late February, he was given police protection.


The arrests come amid pressure from the EU, which Montenegro is trying to join, and other western governments and rights groups for Podgorica to get serious about tackling violence against journalists. In its 2013 report on global human rights, the U.S. State Department suggested that a culture of impunity amid ongoing pressure against journalists has had a chilling effect. The report specifically cited the 2007 attack on Softic.


5. Hard-line party calls the shots in Kosovo’s coalition talks


More than a month after inconclusive parliamentary elections in Kosovo, political factions’ struggles to form a government have given the upper hand to a hard-line anti-Serb party, Balkan Insight reports.


Short of a majority, Kosovo’s opposition bloc is trying to prevent Hashim Thaci, who has been prime minister since 2007, from taking the post again. In order to do that, however, it needs the cooperation of the Vetevendosje Movement, whose 16 of the unicameral parliament’s 120 seats are enough to make it a kingmaker.


The opposition parties have cobbled together a coalition of the Alliance for the Future of Kosovo (AAK), Nisma, and the Democratic League of Kosovo (LDK), which leaves them with 47 votes, 14 shy of the number needed to approve a government, Balkan Insight notes.


The catch is that Vetevendosje has demanded that it lead ongoing negotiations with Serbia, a climb-down from an earlier demand that talks be stopped altogether. In April 2013 Kosovo and Serbia reached an agreement that allowed Pristina to assert its authority over parts of northern Kosovo that had been governed by parallel institutions backed by Belgrade. In return, the region’s Serbs were handed autonomy in some areas of governance.


“Vetevendosje, led by Albin Kurti, has taken a hard-line stance against the dialogue with Belgrade, insisting that it has aided the EU aspirations of Kosovo’s former enemy while offering Kosovo little in return,” Balkan Insight writes.


The opposition coalition has agreed to Vetevendosje’s demand to halt the privatization of state companies, according to the news agency.


Although Thaci’s Democratic Party of Kosovo won a plurality in the recent elections, it has struggled to find coalition partners, and some party members have even defected to the opposition. The opposition’s candidate is AAK leader Ramush Haradinaj, who tried and failed to replace Thaci last year.


“The Vetevendosje Movement is making life harder for the opposition bloc by showing them it has the power in all this political mess,” political analyst Halil Matoshi said, according to Balkan Insight. 

S. Adam Cardais is a TOL contributing editor. Ioana Caloianu is a TOL editorial assistant. Mane Grigoryan is a TOL editorial intern

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