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Select Briefing Europe East Summary - May 12, 2006

Core Content Overview

This briefing provides a summary of political, economic, and international developments in Central, Southeast, and Eastern European countries, focusing on recent events in the Czech Republic, Hungary, Poland, Slovakia, and the Baltic States (Estonia, Latvia, Lithuania), as well as updates from Southeast Europe (Bulgaria, Croatia, Romania, Slovenia).

Central European Developments

Czech Republic

• Saudi Foreign Minister Visit: Saud al-Faisal visited Prague on 11 May to discuss bilateral issues with Czech officials, including the situation in Iraq and Iran's nuclear program. He also met with the Czech President and Prime Minister.
• Gas Price Negotiations: On 8 May, Prime Minister Jiri Paroubek requested a 20% reduction in gas prices from Russia for electricity production, following negotiations started in March during Putin's visit.

Hungary

• Trade Agreement with Serbia: On 9 May, Hungarian and Serbian officials signed an agreement to enhance foreign trade and cooperation in infrastructure, noting that transborder collaboration between the two countries is among the most successful in the region.
• Delta Airlines Route Launch: The U.S. and Hungarian ambassadors opened a ceremony in Budapest for the new Delta Airlines New York-Budapest service, highlighting the importance of Hungary's car and hi-tech industries and its relationship with the U.S.
• NATO Response Force Expansion: On 10 May, Hungary announced plans to increase its contribution to the NATO Response Force (NRF) by 200 troops in 2007, replacing water treatment experts. The NATO mission headquarters praised Hungary's performance in the NRF.

Poland

• New Foreign Minister: Prime Minister Kazimerz Marcinkiewicz appointed Anna Fotyga as the new foreign minister, replacing Stefan Meller, who resigned due to a coalition pact. Fotyga previously served as Meller's deputy and was a former European lawmaker for the Law and Justice Party.
• Defense Cooperation with Georgia: Polish Defense Minister Radoslaw Sikorski met with his Georgian counterpart Irakli Okruashvili in Tblisi on 10 May. They discussed a peaceful resolution to the Georgian conflict and cooperation in the NATO partnership framework, including the export of Georgian wine to Poland after it was banned from Russian markets.

Slovakia

• EU Constitutional Treaty Ratification: On 11 May, Slovak Prime Minister Mikulas Dzurinda met with German Chancellor Angela Merkel in Bratislava, discussing EU agenda, security, and trade relations. This was Merkel's first visit to Slovakia since becoming Chancellor.
• Investment Decision by Draxlmaier: On 10 May, German company Draxlmaier decided not to build a car component plant in Rimavska Sobota, Slovakia, due to higher costs, and instead moved the investment to Romania.
• Lowest Tax Burden in EU-25: According to Eurostat, Slovakia has the lowest tax and deduction burden in the EU-25 at 29%, compared to the EU average of 39%.

Baltic States Update

Estonia

• EU Constitutional Treaty Ratification: Estonia became the 15th country to ratify the EU Constitutional Treaty on 9 May, a significant decision by the current parliament.
• Sanctions Against Belarus: On 11 May, Estonia imposed a visa ban and financial sanctions on 31 top Belarusian officials, including President Alexander Lukashenko, following human rights violations and election irregularities in Belarus.

Latvia

• KGB Files Publication: On 9 May, Latvia's Parliament legal committee agreed to publish old KGB files in the newspaper Latvijas Vestnesis on 1 November to avoid influencing the October parliamentary elections.
• Bulgarian Foreign Minister Visit: On 10 May, Bulgarian Foreign Minister Ivailo Kalfin visited Latvia to discuss bilateral relations, Bulgaria's EU accession, and current NATO and EU developments. Latvia expressed support for Bulgaria's 2007 EU membership and shared its experience in managing European funds.

Lithuania

• Gazprom Price Increase: Gazprom raised gas prices for Lithuania from USD 105/m³ to USD 135/m³, effective 1 July 2006, aligning them with other Baltic states and Western Europe. This decision was seen as a response to criticism at the Baltic and Black Seas Forum.
• Continuation of Iraq Mission: Lithuanian Defense Minister Gediminas Kirkilas announced that Lithuania's mission in Iraq will continue for at least one more year, with 50 troops deployed in the DANEVANG camp near Basra.
• Foreign Minister Appointment: On 10 May, Prime Minister Algirdas Brazauskas proposed Petras Vaitiekunas as the new foreign minister following the resignation of Antanas Valonis. Loretta Grauziniene was nominated to replace Vilija Blinkeviciute in the Social Affairs and Labor Ministry.

Southeast European Developments

Bulgaria

• EU Accession Timeline: Prime Minister Sergei Stanishev urged the European Commission to set a final date for Bulgaria and Romania's EU accession, as the Commission was considering delaying its decision until October. A public opinion survey showed strong support for EU membership among Bulgarians.
• Swedish Parliament Ratification: On 10 May, the Swedish parliament unanimously ratified the Treaty of Accession for Bulgaria and Romania, joining other countries in endorsing the document. Many member states postponed their ratification until the Commission's final report.

Croatia

• NATO and EU Membership Prospects: U.S. Vice President Dick Cheney visited Croatia on 6 May, discussing NATO and EU membership. Croatian President Stipe Mesic assured Cheney that Croatia is prepared to contribute to the fight against terrorism and is undergoing military reforms to meet NATO standards.

Romania

• European Energy Community: On 10 May, the Romanian government ratified a bill supporting the creation of a European energy community, which would allow for mutual assistance and a common energy trading policy.
• FDI Growth: The Romanian Agency for Foreign Investments (ARIS) reported a 40% increase in foreign direct investment (FDI) during January-April 2006 compared to 2005, with total FDI reaching 1 billion euros in the first three months of 2006.

Other Developments

• EU-LAC Summit: On 11-13 May, Vienna hosted the 4th EU-LAC Summit, focusing on economic development, social cohesion, and international cooperation. The summit included discussions on WTO trade reform talks and involved representatives from 58 states.
• Slovenia's Support for Bulgaria: Slovene Prime Minister Janez Jansa visited Bulgaria on 10 May, meeting with Bulgarian officials and witnessing the signing of a cooperation memorandum between the two countries' ministries of economy. Jansa also supported Bulgaria's EU membership bid for January 2007.
• European Parliament Mission: On 10 May, the European Parliament elected Slovene MEP Jelko Kacin to lead its observer mission for Montenegro's independence referendum on 21 May.

Key Themes and Trends

• EU Enlargement and Membership: Multiple countries are focused on EU accession, with Bulgaria and Romania seeking entry and others supporting the process.
• Energy Policy and Prices: Energy price increases and regional cooperation are significant topics, especially with Gazprom's pricing strategy and the push for a unified energy market.
• NATO Integration: Several countries, including Hungary and Lithuania, are enhancing their military contributions to NATO and working towards full membership.
• Political Leadership Changes: New appointments in key positions, such as foreign ministers, reflect political shifts and coalition dynamics.
• Transborder Cooperation: Enhanced regional collaboration is evident in trade, infrastructure, and defense initiatives.