| A look at what’s happening across Europe  Russia
President Vladimir Putin’s St Petersburg ally Viktor Zubkov replaced Mikhail Fradkov as prime minister. Analysts suggested the move was part of Putin’s strategy to keep observers guessing ahead of next year’s presidential election; Sergei Ivanov and Dmitry Medvedev are still considered frontrunners to replace Putin rather than the older, less well-known Zubkov, although the latter has said he might throw his hat into the ring. Meanwhile, further evidence of Russia’s new belligerence emerged as it tested what it claimed was the world’s largest non-nuclear weapon.  Georgia
The latest figures showing that foreign direct investment has so far reached $2.2bn (€1.5bn), with second-quarter GDP rising by over 11% this year, confirm that the programme of radical reforms initiated by President Mikheil Saakashvili after the Rose Revolution of 2004 is proving successful. The wave of free market reforms include a flat tax of 12%, zero tolerance of corruption – previously a major problem – and far-reaching improvements to the system of business registration: businesses can be opened in just 16 days against the months it took before 2004. Recent investors include Intercontinental, Kempinski and Parkfield Investment, which is to invest $1bn in the country’s railway system over the next 10 years.  Former Yugoslavia
The last gasp in the dissolution of Yugoslavia occurred with news that the internet domain name .yu – used by both Serbia and Montenegro, despite the latter breaking away from Belgrade last year – is to be scrapped within the next 12 months. The US Department of Commerce, which has responsibility for authorizing all domain names, is to approve new names for the two countries: .me for Montenegro and .rs (for Republic of Serbia) for Serbia.  Russia
EU Commission President Manuel Barroso warned Gazprom – again – not to expect an easy ride in its pursuit of EU energy assets. He pointed out that EU energy markets should be “open but not naive” as regards the Russian gas giant. Critics of President Putin’s Russia argue that as Gazprom is a state-owned entity with strong links to the Kremlin, allowing it to own Western energy assts is undesirable – particularly as Russia has largely closed its energy market to Western firms and has edged out those that had signed production share agreements or other contracts before Putin’s accession to power.  Greece
The ruling, right-of-centre New Democracy party, headed by Prime Minister Costas Karamanlis, narrowly won re-election in a contest that saw its left-of-centre rival Pasok’s share of the vote slump to its lowest level for 30 years. New Democracy now has 152 seats – a loss of 14 seats – with 41.8% of the vote, a majority of just two against the combined opposition in the 300-seat parliament; its support was hit by the devastating forest fires that swept Greece in August and a series of financial scandals earlier in the year, with small far-left and far-right parties benefiting rather than Pasok. Analysts say it is doubtful that Karamanlis can implement the tough free market reforms he proposed during the election campaign.  Ukraine
A high-level EU/Ukraine summit in Kiev, held two weeks before the 30 September parliamentary elections, saw Ukraine’s politicians urged to put their differences to one side and focus on pushing through long-delayed economic, financial and political reforms. EU Commission president José Manuel Barroso indicated that before Kiev could hope to conclude a long-hoped-for free trade agreement with Brussels, it would have to complete its preparations for WTO accession. With opinion polls suggesting that support for the parties is split several ways, Ukraine’s best hope of having a pro-reform government lies with Yulia Tymoshenko, who reformists hope will become the next prime minister.  The Balkans
Five countries – Albania, BosniaHerzegovina, Macedonia, Montenegro and Serbia – have signed agreements with the EU making it easier for businesspeople and others to get visas to visit EU countries. The move comes as all five are seeking closer relations with the EU, with accession the ultimate aim. All of the countries except Serbia and Bosnia have signed Stabilisation and Accession Agreements with Brussels, a process viewed as the first key step towards eventual membership.  The UK
A liquidity shortage in the credit markets compounded by an uncoordinated response from the Treasury, the Bank of England and the Financial Services Authority (FSA) led to panicked queues outside Northern Rock in the UK’s first bank run for almost 150 years, as depositors feared that the bank’s inability to access new financing threatened their savings. Calm was restored by the government’s unprecedented guarantee of all savings in Northern Rock. New legislation is expected to increase guarantees for savings – currently only £31,700 (€45,260) per institution – and to improve coordination between the Treasury, the Bank of England and the FSA, which was set up in 1998 to regulate the UK’s financial system. Europe Amidst a continuing liquidity shortage in the financial markets, the rising value of the euro (€1 is now worth a record $1.41) and a slowdown in the US, there are growing concerns about the economic prospects for the 13-country eurozone. Many countries predict a business slowdown over the coming months, including Spain, previously one of the EU’s more dynamic economies. European Central Bank governor Jean-Claude Trichet insists fundamentals are strong and the growth outlook favourable, while analysts say that maintaining business confidence is essential to continued growth within the eurozone.  Serbia
As Serb and Kosovan Albanian delegations prepared to meet in New York to discuss the disputed region’s future, Serbian foreign minister Vuk Jeremic stressed in London that any EU recognition of a unilateral declaration of independence by Kosovo made without UN authorisation would have “serious destabilising effects on the region” and would probably lead to Serbia abandoning its efforts to join the EU. Insisting that Serbia would not use force, he argued that recognition of Kosovo’s independence would probably also lead to his pro-Western government being replaced by a more nationalistic one. “We want to continue negotiations in good faith, without time limits, with no winners or losers: a just peace,” he said, adding that Serbia is prepared to offer Kosovo almost unlimited autonomy. |