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The International Monetary Fund and the European Union on 17 July suspended talks on the implementation of the savings programme with the Hungarian government. The financial institutions are demanding Hungary impose greater budget discipline and perform a more intensive cost cutting process. Hungary will be unable to use the last tranche of the loan and will seek the opening of a flexible credit line for 2011-2012 until an agreement is reached. Although withholding financial assistance does not pose a risk to the stability of Hungary’s budget, the dispute with the IMF is still having a detrimental effect on the opinion of the Hungarian economy among investors and markets and is causing depreciation of the forint.
On 11 July, the German press announced that Gazprom had invited the German company RWE, a strategic shareholder of the EU project Nabucco, to join the South Stream project. The proposal was probably aimed at discrediting Nabucco participants to potential gas suppliers and investors at a moment which is crucial for the enterprise.
The board of the foundation Flight, Expulsion, Reconciliation was appointed on 8 July. The Bundestag approved its composition by the votes of the Christian Democrats and Liberals. For the government coalition politicians this means success, which in their opinion will enable the launch of essential work on the expulsions museum project. However, some candidates’ statements regarding, for example, the causes of the outbreak of World War II, have raised strong controversy among representatives of the opposition.
Analyses | | Ewa Paszyc
Gazprom’s Annual General Meeting on 25 June saw no changes in the makeup of the company’s management. Despite the worst production and financial results in recent years, Gazprom did not announce any serious revision of its policies. However, unfavourable changes on the European gas market, including increasing competition among gas suppliers, will most likely force Gazprom to make further changes to its investment programme, and to make its formulas for contracts and its pricing policy more flexible.
Analyses | | Iwona Wiśniewska
The nature of the CU and the manner of its introduction show that for Russia, the move is above all of political significance, and serves to strength Moscow’s influence in the region.
On 2 July, the Russian company Gazprom and the Belarusian gas company Bieltransgaz agreed to raise the transit fee for the transmission of Russian gas across Belarusian territory, and to raise the wholesale price of gas for customers in that country. This formally ends the bilateral gas dispute which in June led to Russia limiting gas transmission to Belarus for three days. However, this agreement is only temporary in nature, as the most important points of contention in the two states’ relations, both concerning gas and crude oil, still remain unresolved.
At the beginning of July, the Ukrainian government and experts from the International Monetary Fund agreed the terms of a new stand-by loan. The IMF’s Board of Directors will take the final decision at the end of July. The renewal of co-operation on loans will affect the improvement of the country’s balance of payments and the financing of its budget deficit, but it will also strengthen Ukraine’s position on the international capital market. The conditions laid down by the IMF may be a catalyst for reforms to improve the situation of Ukraine’s public finances.
The arrests by the FBI on 26-28 June of 10 persons suspected of working for the Russian Federation’s intelligence services, and the confirmation of that fact immediately after the end of President Dmitri Medvedev’s visit to the USA, has not as yet brought any negative consequences to political relations between Washington and Moscow. Both sides in their official reactions confirmed their ongoing desire to continue bilateral cooperation, and played down the significance of the FBI’s operation, despite the media’s growing interest in the case. This indicates that both sides are interested in maintaining an image of improving bilateral relations as well as the effectiveness of the ‘reset’ policy.
Analyses | | Marta Zawilska-Florczuk
Due to competition among particular coalition parties and no consent on the cabinet’s priorities, cooperation between the Christian Democrats and the liberals until the end of their term will be limited to the most urgent projects. However, coalition breakdown is not to be expected now, though it had been forecast by German media.
Analyses | | Jakub Groszkowski
The centre-right coalition has a majority of 118 votes in the 200-person Chamber of Deputies and may count on the favour of President Vaclav Klaus. However, the government’s stability is going to be weakened by the ambitions of the leaders of the coalition parties competing for the leadership on the right of Czech political scene.