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Grousing in the EU, Anxiety in Moldova Over Russia’s Import Ban

Plus, Saakashvili faces more charges and a Croatian court hands anti-Cyrillic campaigners a setback.

by Barbara Frye, Ioana Caloianu, and Anders Ryehauge 14 August 2014

1. Producers, politicians seek to avoid sanctions-related pain

 

Only a week into Russia’s ban on food imports from the West, some exporters are looking for ways around it, some politicians are seeking compensation for their countries, and some commentators are grousing about the economic effects.

 

Balkan Insight reports that in EU member Croatia, home to several food companies with “significant exports to the Russian market,” some business leaders are suggesting that companies send their products to Serbia to be repackaged and shipped on to Russia. Serbia is not yet a member of the EU and is free to trade with Russia.

 

For its part, Belgrade – seeing an opportunity for its own producers to take a larger share of the market – has vowed to crack down on any EU-based company that tries to funnel goods through its territory to Russia.

 

In Bulgaria, Agriculture Minister Vasil Grudev has called on the EU to compensate food producers for the losses they incur by being locked out of the Russian market, Balkan Insight also reports. The ministry said Grudev’s call had the backing of governments in the Czech Republic, Austria, Poland, Finland, Belgium, and Estonia.

 

The EU sent (pdf) about 12 billion euros’ ($16 billion) worth of agricultural products and another 12 billion euros’ worth of food and raw materials to Russia in 2013.

 

Lithuania will be particularly vulnerable. Aside from the EU as a whole, Russia is by far the country’s largest export market, worth 8.2 billion litas (pdf) ($3.1 billion) in the first half of this year.

 

Edward Lucas, a senior editor at The Economist and a resident of Lithuania, urged Western consumers and importers to buy more Lithuanian goods in a recent television interview. Lucas said there has long been the risk that relations with Russia could deteriorate. “I always encourage our country to diversify its exports and not focus solely on Russia,” he said, according to the Baltic News Network

 

As for compensating companies hit by the sanctions, Lucas said, “It would not be fair to impose taxes on other companies in order to compensate losses of companies that worked with Russia for easy money.”

 

In the Czech Republic, center-right opposition politician Karel Schwarzenberg upbraided commentators for focusing on the costs of the sanctions while forgetting the ethical considerations that led the EU to take action against Russia, according to The Wall Street Journal’s Emerging Europe blog. The Czech Republic sends about 3 percent of its exports to Russia, The Journal reports.

 

“If we back off, then there will no longer be a brake against violence in Europe,” Schwarzenberg wrote in a statement on the website of his TOP 09 party. “It is essential that Europe stands against aggression. Otherwise, violence will go on and on, and other countries will get caught up in it, including the Czech Republic. Have we learned nothing from the 20th century?”

 

2. Third Russian embargo in eight years buffets Moldova

 

Moldova’s government is trying to stem huge losses for the country’s agricultural producers after Russia imposed a trade block on Moldovan fruit last month, EurasiaNet.org reports.

 

The embargo, widely seen as a reaction to Moldova’s pursuing closer ties with the EU, will have enormous economic consequences for the small country if it cannot find other markets for its fruit.

 

Although a majority of Moldova’s agricultural exports go to the EU, a hefty 43 percent, worth 740 million euros ($989 million), went to Russia last year, according to EurasiaNet.org. Russia bought almost all of Moldova’s fruit exports in 2012, the news site reports, citing an “expert study.”

 

A fruit seller works a kiosk in Irkutsk, Russia, in 2009. Photo by Kyle Taylor/flickr.

 

Prime Minister Iurie Leanca has promised to help farmers offset some of their losses with several new initiatives, including an unspecified amount of compensation.

 

In addition, the EU has doubled the amount of Moldovan fruit that can be imported duty-free, and Leanca said western neighbor Romania is prepared to buy 14,000 tons of Moldovan apples next month, Interfax reports. That would amount to 17.5 percent of Moldova’s 80,000-ton apple quota for the EU as a while, according to EurasiaNet.org.

 

The former Soviet republic is pursuing eventual EU membership and has made recent efforts to become more independent of Russia and more attached to the EU market.

 

According to figures from EurasiaNet.org, the proportion of Moldovan exports going to the EU increased from 41 percent in 2005 to 46 percent last year. Trade with CIS countries shrank from 50 percent of exports to 40 percent during the same period.

 

Russia banned imports of Moldovan wine in 2006. The embargo was lifted in 2009 but was reimposed last year as Chisinau geared up to sign a free-trade and political association pact with Brussels.

 

3. Misappropriation of funds added to charges against Saakashvili

 

Criminal charges keep piling up against Mikheil Saakashvili. The former president of Georgia is already facing charges in two cases of abuse of office, and this week prosecutors brought a third charge of misspending public funds, Civil.ge reports.

 

Authorities say Saakashvili spent funds from the government agency tasked with protecting top-ranking officials on stays in high-end resorts, visits to “aesthetic clinics,” and clothes, according to the website.

 

The charges, which carry a penalty of up to 11 years in prison, stem from a trove of documents, “including

Mikheil Saakashvili
spending records from [the Special State Protection Service], payment receipts, and invoices from hotels and other service providers,” that were declassified in April 2013.

 

Along with Saakashvili, agency director Temur Janashia is charged in the case, which prosecutors say covers the misspending of 8.83 million lari ($5.1 million) in public funds from September 2009 until February 2013.

 

Saakashvili’s United National Movement lost power to the Georgian Dream coalition in 2012 and his last term as president ended in November. He is now a “senior statesman” at Tufts University’s Fletcher School of Law and Diplomacy.

 

He also faces charges of ordering police to use excessive force to break up a demonstration in November 2007 and ordering the beating of an opposition member of parliament in 2005.

 

Saakashvili’s lawyer called the new charges “cynical,” according to Civil.ge. The former president denies wrongdoing and has not appeared for questioning in any of the cases. In absentia, a court ordered him to be placed in pretrial detention, the website reports.

 

4. Croatian court rejects proposed anti-Cyrillic referendum

 

Croatia’s highest court has ruled against the holding of a referendum that would have chipped away at minorities’ language rights, according to Balkan Insight.

 

If approved by voters, the referendum would have changed the law to confer official status on a minority language only in regions where its speakers constitute at least half the population, instead of the current one-third threshold.

 

The push for a vote was aimed at the eastern town of Vukovar, where ethnic Serbs make up 35 percent of the population, according to the 2011 census. Some Croats there have protested the introduction of signs in Cyrillic alongside the existing ones in Latin script in light of the Serbia-led Yugoslav army’s horrendous siege of the town in 1991, which caused more than 1,200 deaths.

 

The referendum was an initiative of the Committee for Defense of Croatian Vukovar, an association of war veterans. Its members started the petition drive to change the minority-language law in November 2013 and within two weeks had collected 650,000 signatures. Parliament sent the issue to the Constitutional Court in July.

 

Although the court acknowledged the right of people to change existing laws, it also said that such initiatives “must be reasonably justified for reasons that spring from a democratic society based on the rule of law and protection of human rights,” according to Balkan Insight.

 

The veterans’ group said it was considering taking its case to the European Court of Human Rights, Reuters reports.

 

5. Czech investors put their money in the ground

 

As farm profits spiral upward in the Czech Republic, investors seeking stability and growth are starting to put their money into agricultural land funds, Bloomberg reports.

 

Farm profits rose sixfold from 2009 to 2013, the news agency reports, citing government statistics, and new funds investing in farmland are predicting annual growth of 6 percent to 10 percent.

 

The time is propitious, investors told Bloomberg, because farmland is still more affordable in the Czech Republic than in neighboring countries but its worth is rising fast. By one estimate, the value of one hectare of Czech farmland rose by 94 percent from 2004 to 2013.

 

That compares with a 52 percent return on government bonds and a 4.2 percent loss on an index of major stocks on the Prague exchange, according to Bloomberg.

 

In the long run, fund managers say, the biggest risk to farmland investments is the loss of state support to agriculture. “But that is very unlikely to happen within our investment horizon,” Martin Burda, a founder of the Cesky Fond Pudy (Czech Land Fund), told Bloomberg.

 

In the short term, prices for agricultural products could be pushed down as foodstuffs flood in from neighboring countries hit harder than the Czech Republic by Russia’s import ban.

Barbara Frye is TOL's managing editor. Ioana Caloianu is a TOL editorial assistant. Anders Ryehauge is a TOL editorial intern.
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