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June 2009

Eastern-Europe - Monthly political report

Ten countries of the region held European Elections in June. There was no overall rule, but there were recognizable tendencies. Albania held elections as well, here results are quite obscure and questionable. Bulgaria saw the last weeks of its electoral campaign. Moldova and Ukraine once again called for elections. Bosnia and Latvia escaped bankruptcy by the skin of their teeth. Belarus became engaged in a serious debate with Russia. Serbia is nearing a crisis within the government, while in Romania the quarrel of the two main parties continues. Azerbaijan threatened separatists with the use of military force again. The Croatian Prime Minister unexpectedly resigned.

The most important event of the month was the European parliamentary election in 10 countries of the region. Voters cast their ballots 'from their hearts' and for 'faces': no universal rule can be made about the results, but in most places the election went as expected. In Latvia, however, the vote brought a landslide victory. The election was won by Civic Union, a small governing party, led by well-known euro-politicians, ahead of the left-wing parties, which have their roots in the Russian-speaking minority. The country held local elections simultaneously, which also contributed to the strengthening of the left. Nils Usakovs, the chairman of the opposition Harmony Centre became the mayor of Riga, supported by a left-liberal coalition led by the candidate of Latvia’s First Party, Ainars Slesers, which was formed after heavy haggling. The Latvian government was not shaken by the election. In the end, the finance minister, Einars Repse, cut pensions. This was the only way to avoid a bankruptcy of the state. Wages have also been cut. This will be followed by a thorough reform of the public sector. The idea of progressive taxation, however, was dismissed. In response to austerity measures, the health minister Ivars Eglitis resigned, his successor is Baiba Rozentale. Their supporter, the People’s Party is more and more critical of the government. In Poland, on the contrary, results were no surprise. The election was an overwhelming success for the senior governing Civic Platform (PO), ahead of its reviving opposition. The two main parties agreed to support the candidacy of Jerzy Buzek for speaker of the European Parliament. The opposition Law and Justice is, by the way, torn by inner disputes - some of the former prominent politicians of the party may be seeking new ways to go. PO meanwhile, upset smaller parties, dismissing a compromise on the law on media without having informed them. In July a budget revision will take place (but, according to the government, without tax revisions). PO would also strengthen its position by amending the electoral law. The European election brought the victory of the largest governing party in Slovakia as well. However, the opposition also gained strength, and the popularity of the far-right National Party seriously declined. Nevertheless, it was the fairly successful Party of the Hungarian Coalition that split. Deputies, with the leadership of former party chairman Béla Bugár announced the creation of a new party called Bridge (Most), open towards Slovaks as well. While - surrounded by protests - justice minister Stefan Harabin left to become the chairman of the Supreme Court (and while the government adopted a decision on the creation of the new Special Criminal Court), the new, discriminatory law on state language caused an uproar among the Hungarian minority. The Lithuanian government could also communicate the election as a success, despite the weak performance of junior governing parties. The 'inner opposition' of the government, the Party of National Revival and the liberal-centrists (LCS) did not make it into the EP. In the LCS, already, this led to personal changes: Gintautas Babravicius became the party chairman instead of Arturas Zuokas, and the reunification of the two liberal parties is back on the agenda. While conservatives - without a coalition conciliation - proposed a two-point increase in the VAT (which may be followed by cuts in the social budget), Ingrida Simonite became finance minister to replace Algirdas Semeta, who will become an EU-commissioner. The parliament started debating the dissolution of the energy holding Leo LT.

In Slovenia, governing parties failed at the EP-election. The right-wing opposition, on the other hand, not only gained strength, but became more fragmented. A considerable success of the government - an agreement was reached on the salaries of judges, who have been on a strike for more than 10 months - was marred by a scandal of Gregor Golobic, chairman of the junior governing social-liberal Zares. Golobic lied to the media about his assets in a company that became involved in shadowy lending, but he remained a minister. In July, the parliament will decide about the budget revision. No steps ahead were made, however, on the field of the Slovenian-Croatian border dispute, after the failure of the proposals of Olli Rehn, enlargement commissioner to the EU. The Estonian governing coalition - already reduced to two parties - also suffered delicate losses. The senior governing Reform Party finished only third, overtaken not only by the opposition Centre Party, but the 'protest-candidate' Indrek Tarand as well. This marks how fragile - and supposedly only temporary - solution the minority governance is. The parliament, nevertheless, managed to decide on the new law on labor contract’s coming into effect earlier. The legislature also decided on a hike in VAT, excise taxes and contributions to the unemployment fund. The so-called 'bronze night' law, which would have amended the law on assembly, was vetoed by the President.

There were some countries with grand coalitions, where one could not easily draw conclusions about the performance of the government, based on election results. In the Czech Republic the centre-right Civic Democratic Party (ODS) won the election, and the chairmanship of the Social Democrat (CSSD) Jiri Paroubek is more and more questioned. Parties - along with supporting the interim government - have been actively preparing for the autumn elections. The CSSD has been looking for possible partners among Christian Democrats (and their new chairman, Cyril Svoboda), who have been reoriented more to the left after the creation of TOP09, the new right-wing party of Miroslav Kalousek. Meanwhile, it became clear that green parties would not reunite - renegade deputies created the Democratic Green Party with the chairmanship of MP Olga Zubova, while the leader of the original party became Ondrej Liska. In Romania, on the contrary, the situation is totally even (with a sudden revival of the extreme right). The fact that the grand coalition is constantly on the verge of collapse, was marked by several events: the debate about several important reform laws on the field of the judiciary, the draft ordinance, strengthening the legislative powers of the government, unconfirmed news about possible changes in the tax system, and the 'speech of truth' of Social Democratic leaders, in which they severely attacked the President Traian Basescu and also the Democratic-Liberal Party. The delicate equilibrium is marked by the fact that in spite of the impossibility of the two parties’ working together, neither of them would cross a certain line.

For Bulgaria, the election was a rehearsal, as the country will hold parliamentary elections on 5 July. At the European election, a number of parties revived, i. e. the liberal National Movement and the centre-right Blue Coalition, that may have secured their places in the parliament this way. The electoral campaign is marred by protests against the bad social situation, catastrophic public safety, and organized crime. The extreme-right Ataka is going through an internal crisis. The declining popularity of the party may lead to the dismissal of the party chairman Volen Siderov (the parliamentary group of the party has already ceased to exist), which may result in the splitting of the party. Meanwhile, Albania - at the end of the month - held its own parliamentary election, which, although having been a step forward compared to past elections, did not meet democratic standards fully. Results are not less obscure: the Prime Minister Sali Berisha’s coalition won by a hair’s breadth and results are questioned by the opposition, as votes are being recounted because of irregularities. The fate of the government was probably decided on 4 July when the opposition Socialist Movement for Integration, surprisingly, joined Berisha, so the Prime Minister will rely on a small, but stable majority in the next term. Meanwhile, early elections were called in Moldova, for the 29 July, and the turnout level needed for the elections to be valid was lowered to 33%. The three opposition parties are maintaining a cooperation hotline, while the party system may be changed with the resignation of the former speaker Marian Lupu from the Communist Party, bringing a number of party members (and voters) with him to the Democratic Party. On the centre-left, two former prime ministers, Vasile Tarlev and Dumitru Braghis will join their forces. The Ukrainian parliament also decided on the date of early elections - again. The vote will be on 17 January. The President Victor Yuschenko emphasized that he will not only attend the elections out of őbligation', although the popularity of his party is hitting low single digits, and the Kiev organization of his party turned against him. One of his allies, the defense minister Yuri Yekhanurov also left the government, along with a number of other ministers, who have to be replaced in July, provided that the parliament is able to work. After the collapse of the coalition talks between the Prime Minister’s Bloc and the Party of Regions, shortly after the settlement of Ukrainian gas debts to Gazprom, the deputies of PR again block the parliament. Gazprom became an important player not only in Ukrainian but in Belarusian politics as well. Another chapter in the breakup of Minsk and Moscow after the 'milk war' was the call from Gazprom to the Belarusian government to settle its gas debts. This is likely to happen only in August. Belarus, on the other hand, turned visibly towards the West: along with economic talks with Lithuania the IMF also widened the country’s loans, but it is still not known how serious the threats of Gazprom are. Russia, meanwhile, is in deeper and deeper crisis. The forecast of the government predicts already a 8,5% shrink in the GDP for 2009, which the government want to tackle with a number of possible solutions, like discount lending through VEB, and state loan bonds. Despite this, in some regions the government had to intervene, so local leaders will face stricter control. After standardizing the top courts, the parliament adopted a law on obligatory anti-corruption overviews. The Northern Caucasus, meanwhile is more and more destabilized. Ingushetia is at the edge of war, after an assault on the life of the autonomous republic’s president was committed. This was not the first violent attack in the region.

In Kosovo foreign policy dominated the agenda as well. After the IMF, the World Bank also gave green light to the country’s accession in June, although Kosovo must pay a part of Yugoslavia’s debts. A diplomatic scandal broke out when the former Prime Minister Agim Ceku was arrested in Bulgaria (although Ceku was soon released). The President Fatmir Sejdiu scheduled local elections for November, in spite of the opposition’s protests. Before the vote, the problems of the Northern part of the country should be resolved, where customs are still not recognized by Serb inhabitants. The Georgian opposition is also still demonstrating, although by now, the effects of the protests have become marginalized. In Tbilisi the commission for the reform of the constitution is already operating, with the participation of certain opposition forces, to whom the President Mikheil Saakashvili offered even the position of deputy minister of interior. Radical oppositionists were accused by the President of being funded by Russia, which the government tried to prove with an audiotape. Possibilities of the opposition will be cut by an amendment of the law on financing of parties and the law on assembly. At the same time, the government will draft a new stimulus package. The Macedonian government also wants to provide aid to enterprises, meanwhile thinking about a possible IMF-loan. For the time being, Macedonia received funds from the World Bank and EBRD for certain concrete projects. IMF would give $200 million. The budget has already been cut by 9% in June. A bigger problem, however, is that there are no steps made ahead, and neither is there a common ground for negotiations in the name-question. This may countermand the government’s hopes next month to start the negotiations about the accession to the EU. This is highlighted by many other events, as the resignation of Ivica Bocevski, the deputy prime minister in charge for European affairs.

Fruitless debates weaken the parliament in Montenegro as well. The country - together with Macedonia and Serbia - will cancel the visa regime with the EU next year. After the new government of Milo Djukanovic was formed (stressing the position of the finance minister Igor Luksic), an agreement was reached about the debts of the KAP aluminum firm, and about its social program, which put an end to demonstrations. The government, however, was not able to reach an agreement with the opposition about chairs in parliamentary committees. The opposition wants four chairs, plus two extraordinary committees. The government proposed a rotation system in chairing committees, but the parties did not accept. In Serbia, meanwhile, the coalition is on the verge of a considerable crisis, as in June local elections were held in Zemun, Kosjeric and Vozdovac, and there may be coalitions formed between the senior governing Democrats and the splinter party of the Radicals, the Serb Progressive Party (SNS). For the time being, the Socialists are in negotiations with SNS, but if a coalition is formed, that may lead to cooperation on the state level as well, as the liberal G17 Plus party would almost surely leave the government. Parties, by the way, are visibly preparing for a possible early election, but there are no open negotiations about this so far. The law on regional development, adopted in June, foresees the debated reform of local administration and the planned amendments to the electoral system. The local administration was reformed in Azerbaijan too, where the number of local authorities will be reduced by a thousand before the December local elections. The vote is already an issue in the country, and tensions are also growing. After another unsuccessful meeting of the Azerbaijani and Armenian presidents in St. Petersburg the President Ilham Aliyev threatened Karabah with the use of military force. Armenia still has Russia behind its back both militarily and financially. During the month the IMF and the Russian loan of the country have also been extended, because budgetary incomes were worse than expected. Owing to an amnesty, a number of opposition activists were released, along with supporters of the governing parties, who cheated in the Yerevan elections in May. The government - thus fulfilling its international őbligations' - dissolved the commission, examining last year’s riots. The three main opposition parties tried to reach a common platform, but disagreements are too big between the National Congress and the Revolutionary Federation.

The situation became more tense not only in Karabah, but also in Bosnia and Herzegovina which is on the verge of collapse again. At first, bankruptcy seemed unavoidable, as the government tried to renegotiate the deal with IMF after heavy protests of war veterans, but then the new prime minister of the Federation, Mustafa Mujezinovic reached an agreement with protesters, so the country will get €1,2 billion in July. The parliament of Republika Srpska, meanwhile, decided to maintain resolutions questioning the transfer of competences to the state level. These were declared invalid by the High Representative Valentin Inzko. For the time being, there is practically an open fight between the Prime Minister of RS, Milorad Dodik and Inzko, which may lead to the dismissal of Dodik, who is being probed in corruption cases. This however would result an even deeper political crisis. Not only the Federation elects a new Prime Minister, but Croatia has to as well, as on 1 July, totally unexpectedly - and so far with no official explanation - the Prime Minister Ivo Sanader resigned of all his political offices, and also declined from his party’s candidacy for the presidency. The most likely explanation seems that Sanader wanted to avoid a coup-d’etat within the party by escaping forward, and replacing himself with his deputy, Jadranka Kosor. The last straw to break the camel’s back - after the protests of farmers and the economic crisis - was the failure to agree with Slovenia in the border dispute, which threatened with the possibility of the postponement of the country’s accession to the EU. A major reshuffle of party ranks may also take place in the governing Democratic Union, while the chairman of the opposition Social Democrats demonstrated his powers in the party by distributing positions in Zagreb.

In July, the new Albanian and Croatian governments will be formed. The Azerbaijani and Armenian, as well as the American and Russian presidents will meet. Bulgaria and Moldova will elect their new parliaments. Macedonia, Bulgaria and Croatia may ask for an IMF-loan. In Estonia, the new law on labor contracts will take effect. The dispute between Russia and Belarus may be settled.

5 July: parliamentary election in Bulgaria

29 July: early parliamentary election in Moldova

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