International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Russian opposition activist Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Russian opposition activist Navalny calls for supporters to take to the streets this weekend
One of Russia’s biggest wood product companies, Segezha could be Sistema’s next IPO
New Ukrainian VC firm QPDigital aims to invest up to $100 million in digital startups
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Estonian premier quits after Tallinn development scandal
Czech Pirates and Mayors approve final coalition agreement for 2021 elections
OUTLOOK 2021 Czechia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
OUTLOOK 2021 Hungary
Hungarian government remains silent after Capitol riots
World Bank expects modest recovery for Europe and Central Asia in 2021
OUTLOOK 2021 Slovakia
FDI inflows to CEE down 58% in 1H20 but rebound expected
Slovakia to invest €1.2bn in digitisation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
BALKAN BLOG: The controversial recipe for building up Albania
Heavy flooding causes chaos in parts of Southeast Europe
Vodafone Albania plans €100mn infrastructure investments after AbCom merger
Turnover rose on Bosnia's two stock exchanges in 2020 while prices fell
Storming parliaments: New Europe's greatest hits
Kyiv accuses Bosnian President Dodik of lying about icon gifted to Russian foreign minister
Bulgaria’s government considers gradual easing of COVID-related restrictions
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
ING THINK: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Zagreb Stock Exchange's Crobex10 index at highest level since March 5
OUTLOOK 2021 Kosovo
Arrera Automobili aims to launch Albania’s first supercar
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Moldova’s PM resigns to prepare the ground for early elections
Socialist lawmakers in Moldova scrap settlement on $1bn bank frauds
Montenegrins say state administration is most corrupt institution
75% of Montenegrins want EU membership
Montenegro’s new ruling coalition carves up top state jobs
North Macedonia's manufacturing confidence indicator down by 8.5 pp y/y in December
OUTLOOK 2021 North Macedonia
Transparency International warns of high corruption risk in CEE defence sectors
OUTLOOK 2021 Romania
Romania’s central bank cuts monetary policy rate by 25bp to 1.25%
Romanian construction companies' activity slows in November after intense 2020
OUTLOOK 2021 Serbia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
Slovenia’s dire COVID-19 situation in 4Q20 caused second economic dip
Turkcell denies any affiliation with $1.6bn loan in default extended by Ziraat Bank to Virgin Islands company
BEYOND THE BOSPORUS: Let’s tentatively pencil in a date for Turkey’s hot money outflow
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
Armenia’s PM cautions conflict with Azerbaijan “still not settled” after trilateral meeting with Putin
OUTLOOK 2021 Georgia
Georgia’s political kingpin Bidzina Ivanishvili quits politics
Modern-day “Robin Hood” inspires Georgians drowning in debt
Durov rejects Western funds’ offer to buy 5%-10% of Telegram with $30bn valuation
Iran’s navy conducts missile drill while analyst argues Trump even capable of nuclear strike in final days
TEHRAN BLOG: Who’s more credible? Johnson backing Trump’s Nobel chances or Iran applauding arrest warrant for US president?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
OUTLOOK 2021 Kyrgyzstan
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
OUTLOOK 2021 Tajikistan
China business briefing: Not happy with Kyrgyzstan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
Turkmenistan: The dammed united
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
OUTLOOK 2021 Uzbekistan
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The government of Transnistria is teetering on the edge of insolvency, as Moscow turns the screws ahead of presidential elections this autumn at which opaque economic groups will battle for the right to plunder the Moldovan enclave.
Russia has defended Transnistria militarily and kept it afloat economically since it broke away from Moldova after a civil war in 1992. Typically, Russia has provided some $100mn per year (10% of the enclave’s GDP) but the subsidy was suspended last year as a signal of Moscow’s displeasure with executive President Evgheni Shevchuk, who is haemorraging public support and accused of siphoning off Russian aid.
The suspension of aid has plunged the enclave’s $1bn economy into economic crisis, worsened by a slump in exports caused by the economic downturn in the whole CIS region. Transnistria’s GDP plunged some 20% y/y in 2015, according to Expert Grup think tank in Moldova.
Moldova itself is Europe’s poorest country and has suffered severe emigration problems since the collapse of the Soviet Union. In Transnistria the population has decreased by 14.3% since 2004, according to a 2015 census.
The central bank recently announced that a shortage of foreign exchange reserves has made it practically impossible to maintain the fixed exchange rate of 11.3 Transnistrian rubles to the US dollar.
The central bank has proposed a 12% devaluation of the local currency, but parliament, which has been dominated by the opposition Obnovlenie party since elections last autumn, has rejected the proposal. Instead the government has allowed the central bank to take 100% of exporters’ foreign exchange earnings, compared to the 25% mandatory rate levied currently.
Last year the Shevchuk-led government had to slash public sector wages, pensions and social benefits by some 30%. It also has outstanding debts of $5bn for the natural gas delivered by the Gazprom-controlled Moldovan natural gas transport company Moldova-Gaz.
This year the budget has fallen victim to the dispute between the president and the parliament, as both sides get in the trenches ahead of the presidential election.
Parliament has rejected the president’s 2016 budget and has instead proposed its own spending plan that, according to the president, would be almost double forecast revenues. The president vetoed on April 29 key paragraphs of the parliament’s budget plan, saying it overestimated revenues by 1.1bn Transnistria rubles from the government’s original plan of RUB1.4bn ($124mn).
For their part, Obnovlenie – which is financed by the enclave’s dominant economic group Sheriff – accuses Shevchuk of treason and of allegedly siphoning off $100mn from the state budget, accusations he denies.
The current events are strikingly similar to the developments in 2011 when Shevchuk replaced (with the support of Russia and Sheriff) his predecessor Igor Smirnoff, who had lost Moscow’s favour for allegedly siphoning off public money, as shown by this wikileak note.
Five years later, Sheriff plans a similar manoeuvre to re-gain Russia’s financial support, by replacing Shevchuk with a new candidate, probably Obnovlenie’s Vadim Krasnoselski.
Sheriff was established in the early 1990s by Transnistrian military officers turned entrepreneurs Viktor Gushan and Ilya Kazmaly. Now it is formally owned by Gushan alone. The real owners have never been disclosed, though they are believed to be Russian.
Sheriff’s companies include the second largest European textile producer Tirotex, major spirits producer Kvint, petrol stations, hypermarkets, a TV channel, bakeries and the Sheriff Tiraspol football club.
Sheriff has extended short-term interest-free loans to the government, which come due just before the poll. The two loans, worth a total of $32.2mn, are being used to repay wages and pensions that were missed last year and to finance subsidies to cut the natural gas and electricity prices charged to rural households.
The government has also turned to Moldova, which has renewed the contract with Transnistrian power group Cuciurgan, still one of the country’s major power companies and the enclave’s main source of foreign exchange.
The price was re-negotiated at 28% below the price charged in 2015, but Moldova’s imports of electricity at this price would still amount to some $150mn this year.
The gas-fired power plant is owned by Russia’s Inter Rao group but an offshore entity, Energokapital, operates as an intermediary. Energokapital was founded in October 2014 by individuals close to President Shevchuk, Mold Street reported.
Energokapital takes natural gas from Gazprom via Moldova-Gaz and Tiraspol Transgaz, which is provided for free, and sells the electricity to Moldova. It is unclear how the big profits made are shared between Energokapital and Transnistria’s budget.
Recent media investigations also allegedly revealed connections between the owners of Energokapital, and companies involved in the siphoning off of $1bn from Moldovan banks. Whether there is an ownership connection, or the two have used the same shell companies in UK, remains unclear.
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