Emerging Europe Summer 2019 by Emerging-Europe

Summer 2019

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30-15: From round table to European parliament Life in Transition: Cleaning up emerging Europe Outlook on Kosovo: Europe's youngest country Eurovision: Sing a song of politics

e me r g i n g - e ur op e . com/ a ward s

J oin the Awards Cere mony on 2 8 June 2019, EBRD HQ in London

Pa r t n e r s

INBRIEF A former comedian, Volodymyr Zelinsky, was elected president of Ukraine. Mr Zelinsky easily defeated the incumbent, Petro Poroshenko, in the second round of voting on April 28. While Mr Zelinksy's victory has been broadly welcomed by Ukraine's international partners, his somewhat vacuous campaign which was short on content and policy and made little mention of Ukraine's relationship with Russia, has led most commentators to take a 'wait and see' approach. Alleged connections with an influential Ukrainian oligarch also cast a cloud over the victory. Anti-corruption activist and environmental campaigner Zuzana Čaputová comfortably won the second round of Slovakia’s presidential election, taking more than 58.4 per cent of the vote. Ms Čaputová defeated the European Energy Commissioner Maroš Šefčovič, who was backed by Slovakia’s ruling SMER party. “This campaign has shown that values such as humanity, solidarity and truth are important for lots of people in Slovakia,” Ms Čaputová told supporters at a victory rally in the Slovak capital Bratislava. “Politics are no longer a sign of weakness. Today we have shown that they are a sign of strength,” she added.

The Vienna Institute for International Economic Studies (wiiw) said in its latest growth forecast that the boom experienced by much of the emerging Europe region in 2017-18 is over, and that growth rates will mostly trend lower in the next two-three years. Weaker global growth, US protectionism, Brexit and ongoing problems in the eurozone represent a serious threat to CESEE’s export-reliant economies. The Czech Republic has the highest job vacancy rate in the European Union, according to new data published by Eurostat. At six per cent, the vacancy rate in the Czech Republic is almost twice that of Belgium and Germany (3.4 per cent). Hungary is the only other emerging European country which has a higher vacancy rate than the EU average of 2.3 per cent. The lowest rates in the EU are found in Greece (0.4 per cent), Bulgaria, Ireland, Spain and Portugal (all 0.9 per cent). Kosovo banned all forms of gambling in an attempt to crack down on crime after two members of staff were murdered in separate incidents at Kosovan casinos. “It’s chaos,” said Kosovo’s prime minister Ramush Haradinaj. “We will no longer allow these venues to be arenas of crime that claim people’s lives.” The gambling industry has grown rapidly in Kosovo since the country’s independence from Serbia in 2008.

in its latest International Narcotics Control Strategy Report, the State Department adds that “the volume of drug seizures and number of drug-related arrests in 2018 was significant, driven largely by Albanian law enforcement cooperation with international partners, increased international pressure, and Albania’s efforts to accede to the European Union.”

A court in Lithuania found a former Soviet defence minister guilty of war crimes over a deadly crackdown aimed at stopping the Baltic state breaking away from the USSR in 1991. Dmitry Yazov, 94, was sentenced in absentia Singapore’s PSA International, the to 10 years in prison. Another Polish Development Fund (PFR) 66 former Soviet military and and the IFM Global Infrastructure The US State Department named KGB officials were given sentences Fund (GIF) managed by IFM Albania as both a source country of between four and 14 years. Investors, signed an agreement of cannabis and, increasingly, Only two of them were present worth over one billion euros to in the courtroom. In March 1990 jointly acquire Deepwater Container a transit country for cocaine and heroin commanded largely by Lithuania became the first Soviet Terminal Gdańsk (DCT Gdańsk), Poland’s largest container terminal. organised crime elements moving republic to declare independence. illicit drugs from source countries The Soviet Union was formally The Gdańsk port is the fastest into European markets. However, dissolved in December 1991. growing container port in Europe.

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Lublin, the capital city of the Lubelskie Region, is a driving force of Eastern Poland and a growing BPO/SSC/IT hub, boasting more than 60 R&D centres

Lublin has one of the highest office-space growth dynamics in eastern Poland, with a current office stock of 180,000 m2, planned to rise to 300,000 m2 by 2020. Costs are competitive: 8-12 euro per m2

Lublin Airport is only 8 miles form the city centre with flights to many cities including London and Munich

Over 50% of Lublin’s residents are under 40, and almost two-thirds of the 350,000 population is of working age. One in five of Lublin’s population is a student

Lublin was named the “Emerging City of the Year in Poland 2018” at the CEE Shared Services and Outsourcing Awards

Marshal Office of the Lubelskie Region Department of Economy and International Cooperation Trade and Investment Promotion Section Artura Grottgera 4 St., 20-029 Lublin Investors and Exporters Assistance Centre +48 81 537 16 15 / +48 81 537 16 21 coie@lubelskie.pl Find us on: invest.lubelskie.pl/en

FROM THE EDITOR I

t is for historians to decide when the Cold War finally ended, but for many of us who have lived and worked in emerging Europe for some time, May 1, 2004, has long been viewed as a date that feels appropriate. Fifteen years after the Berlin Wall fell, the nations which had been on the frontline of the Cold War: Poland, Hungary, the Czech Republic and Slovakia, as well as the newly-independent Slovenia and Baltic states, all took their place in the European Union. Bulgaria and Romania would join them three years later. While all of these countries had enjoyed much progress since the collapse of their communist regimes, it has been EU membership, and access to the world's biggest single market, which in the 15 years since has produced unprecedented economic growth across the board. That growth has not always been painless, nor has it been spread evenly. The poorest members of the European Union still lag far behind the richest. The benefits of EU membership are visible everywhere. Infrastructure has been built (and there is more to come: in April the European Commission announced a new four billioneuro infrastructure package for emerging Europe), foreign investment has been consistently high and progressive social change has been implemented. It is no wonder that those countries in emerging Europe which are not yet members of the EU all – with the possible exceptions of Belarus and

Azerbaijan – are lobbying hard to begin or conclude accession talks. The European Union is not without fault, but it brings truckloads of benefits and guarantees of fair play not found in any other international group of states. Why then, are we seeing something of a backlash against the EU in some parts of emerging Europe. Are we heading for a Czexit? A Hungexit? Or even a Polexit? No, is the short answer. We are not. I have long believed that the euroscepticism of Central and Eastern Europe is, while unquestionably ideological, aimed squarely at domestic audiences. The European Union has been adopted by Viktor Orbán and Jarosław Kaczyński as a convenient scapegoat for any ills that befall their respective countries. Big enough to absorb the blows, the EU in many ways offers these populists a free-hit. That is part of its appeal. Neither country is likely to turn to the east anytime soon: there are no free-hits in that direction. While attacks on media freedom, the justice system, migrants and the rights of minorities do give cause for concern, the EU has more than enough checks and balances in place to ensure that these are never as grave as perhaps some parts of the media, who do not understand the region as well as they might, would have us believe. What's more, there are plans to introduce more checks and balances at once with the new EU budget for 2021-27. EU cash may come with even more strings than it does now. Orbán and

Kaczyński might well be history by then. The European Union most certainly will not. Fifteen years on from the most politically significant expansion in its history, the EU remains a beacon of good practice, fair trade and continental cooperation. Despite Brexit, despite central European populism, it is in remarkably good health. It is no wonder there is a far longer queue to join than there is to leave. •

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Craig Turp, Editor-in-Chief

6 EMERGINGEUROPE

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Food for thought

Emerging Europe Awards 2019

The Eastern Partnership (EaP), a joint policy initiative of the European Union and six former USSR countries - Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine - is marking its 10th anniversary. As Dominik Istrate reports, however, some EaP countries are moving closer to the EU faster than others

Emerging Europe talks to Razvan Tapu, head of the digital transformation centre at Stefanini EMEA.

Is the Eastern Partnership Innovation Q&A: still relevant? Stefanini

Technology shorts

BUSINESS

32 CURRENT AFFAIRS

18 A view from: Washington, Paris and Vienna

Table of contents

That joke isn't funny anymore A TV star and comedian, Volodymyr Zelensky, was elected Ukrainian president at the end of April, winning a landslide victory over incumbent president Petro Poroshenko. The scale of the victory will place immense pressure on the new man to deliver instant results.

Thirty Fifteen For many of the countries of emerging Europe, 2019 offers double cause for celebration: 30 years since the end of communism in 1989 and 15 years since EU membership in 2004. For all concerned, EU enlargement has been an overwhelmingly positive experience. Why then, does anti-EU sentiment in Central and Eastern Europe remain strong?

Hate speech or free speech?

The Big Question Emerging Europe asks some leading thinkers how much the region has changed in the 30 years since the fall of communism, and what challenges still need to be overcome.

Quality, not quantity Emerging Europe speaks to Sir Suma Chakrabarti, the president of the European Bank for Reconstruction and Development (EBRD).

Emerging politicians: Virginijus Sinkevičius and Tomáš Koláčný

LIFE IN TRANSITION

Defence spending: it’s all about the security guarantees

Combatting hate speech in Poland will be a long-term project, with many extremists claiming that their Made in emerging Europe right to say whatever they like – about whoever they like – trumps any Our quarterly look at some of the region’s right not to be offended. most innovative companies.

Unsustainable tourism? Some parts of emerging Europe are struggling with the phenomenon of over-tourism.

From transition to transition: tackling corruption in emerging Europe

EBRD: Country Reports

Kosovo’s IT scene A viable and sustainable ICT sector is something that most countries in the emerging Europe region have been working hard to develop. However, in some markets, Kosovo included, while the industry is growing rapidly, keeping pace with more-developed neighbours has not been easy.

OUTLOOK ON KOSOVO

Rebuilding Kosovo Neglected for decades, investment in infrastructure has been a priority for the Kosovo authorities since the country declared independence in 2008.

Silencing Hungary’s NGOs Two years ago a new Hungarian law which severely limited the activity of non-governmental organisations’ (NGOs) made international headlines. Since then, reduced funding, job losses and a climate of fear have made life almost impossible for organisations whose only goal is to help people in need.

Six of the best restaurants in emerging Europe

Emerging Europe sits down with Neil Taylor, head of Kosovo at the European Bank for Reconstruction Kosovars want to travel. and Development (EBRD), to discuss Why will Europe not let us? both the opportunities and challenges The European Union demands that facing the young country.

There was a time not so long ago when few people travelled to emerging Europe for the food. Great restaurants were thin on the ground and service was invariably appalling. Over the past decade, all of that has changed. We pick half a dozen fabulous places leading emerging Europe's culinary revolution.

Investing in Kosovo

Banking on Kosovo

Kosovars obtain costly, difficult-toprocure visas before travelling outside of their home country. This process is discriminatory and must come to an end.

48 hours in Sibiu

Raiffeisen has been operating in Kosovo since 2003. Emerging Europe speaks to the bank's CEO, Robert Wright, about the country's potential across a number of sectors, as well as the growth of retail banking..

AFTER HOURS

Film, Book, Exhibition

Kosovo's road to Europe runs through Serbia Historic enemies, the future of both Kosovo and Serbia requires compromise and a willingness to work together. Kosovo's president currently appears more willing to achieve this than the country's prime minister.

Manufacturing in Kosovo

Sibiu is the envy of just about every other city in Romania. Boasting a gorgeous central square lined with beautifully renovated medieval houses, the city offers a chance to experience a multicultural Romania once thought lost forever.

48 hours in Sarajevo

A political sing-song

The Eurovision Song Contest was established in 1956 to unite European countries after the devastation of the Second World War. In recent years, it has done exactly the opposite. Will 2019 be any different?.

Life in Albania

Emerging European football is stuck in a rut

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FOOD

FOR

THOUGHT Proﬁt with purpose

of taxes, funding for schools, hospitals and communities. Th is must be the substance of the ‘deal’ between business and society.

We are losing connection with It is unsustainable for more and our planet due to our plastic-fuelled more wealth to benefit the few, disposable habits. Technology is and for business owners (and impacting every area of our lives top management teams) to be and everything is changing. anonymous and distant from their local communities and without I was born in industrial Silesia accountability. (southern Poland) in the 1960s and lived through the dark ages It is right for the morality of communism whilst listening to of business to be challenged my grandparents’ horror stories on environmental impacts, of fascism. I fi nd it worrying that young people nowadays are looking aggressive methods of generating consumption, employment to the extreme right or left for practices, privacy and security of answers to the current problems. personal data and related topics. Photo: Olga Grygier-Siddons An evolution of capitalism is It is time for businesses to needed with a more expansive role recognise that their most important for business in the current era; stakeholders are the communities Olga Grygier-Siddons is a business one that offers solutions to in which they operate – and adviser and mentor, former CEO of the wider challenges of society the purpose of business is to beyond a narrow focus on profits PwC CEE. contribute to the wealth of both for shareholders. Indeed, We live in times when even the most well-functioning businesses shareholders and communities. • can, and should, contribute to mature democratic societies are the development of the country, deeply divided. One segment of society blames the other for all evils. region and local communities with a clear responsibility to We seem to be trapped in digital preserve and improve the natural ‘echo-chambers’, not listening or environment. With responsible interested in the arguments of those with opposing opinions. And leadership, business provides goods and services that customers need, even if we do listen, it has become common to dismiss opposing views it helps develop infrastructure, it provides jobs and, through payment as ‘–fake news’.

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The upcoming European elections Until now, the parliament has been dominated by the European People’s Party (essentially, Christian Democrats), and the social democrats of the Party of European Socialists. A downside of these formations’ domination is the trend toward centralising, equalising and harmonising policy solutions, as member parties of the EPP moved to the left . The shift has limited the real, substantive debate so critical to any functioning parliament. Photo: Geopolitical Intelligence Services

Prince Michael of Liechtenstein, founder and chairman of Geopolitical Intelligence Services AG.

Elections to the European parliament are crucially important. This, however, is not widely recognised by voters as traditionally low turnout across the continent demonstrates. The institution is commonly – but wrongly – seen as toothless, sometimes even as a place to dispose of party activists who are redundant locally. Th is is a fatal misconception, even if the policies of the European Union are prepared and promoted by the European Commission and the deciding institution is the European Council (made up of the leaders of the EU member states). Finally, though, the dynamics of the process are steered by the commission, and the parliament plays the important role of confi rmation. It influences the appointment of the commission and gives consent to the EU budget. Also, it can vote on recommendations to the member governments.

There are outstanding personalities in the parliament, but this fact is somewhat obscured by the strong institutional role of political parties and groups. In recent years, the EU’s cohesion has been challenged – not only by Brexit but also many unresolved policy issues, such as the public debt problem. Attempts at centralisation and excessive policy harmonisation (to impose uniform regulation and solutions on various matters such as taxes and competition, on divergent member countries) are profoundly disturbing. The parliament not only failed to hold sufficiently against them, but rather actively promoted such ill-conceived measures. It sometimes appears – not exclusively in the European parliament, but also in national ones – that the essence of parliamentarism is being neglected, namely, the protection of citizens against government abuse of power. We can see this in the proposed law on telecommunication data storage. The new General Directive on the Protection of Data has not limited the administration’s hunger for collecting data on

individual citizens and businesses. The right to privacy is violated under various pretexts. In the next parliament, it will be interesting to watch the role of the members from the United Kingdom. The country is taking part in the elections even though Brexit has been merely postponed, not canceled. The established parties are now scared stiff of possible large gains by the so-called “populist” newcomers. Parties that have followed sound policies, in the interest of the citizen and kept honest promises, as opposed to serving their own narrow interests, should not be concerned. Newcomers challenging the establishment’s comfort should be welcome. In any case, it is in the interest of the citizens themselves to participate in the vote. A disinterested, non-voting public certainly does not help bring the proper dynamic, the sharp, constructive debate, or the necessary opposition to the parliament. Low voter turnout weakens the role of the institution. It is especially crucial for the smaller member countries to have strong representations. •

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Emerging Europe Awards 2019 WORDS JERRY CAMERON

Emerging Europe Awards 2018

lmost 1,000 businesses, local governments and nongovernmental organisations from all of the 23 countries we cover have applied for the Emerging Europe Awards 2019. Applicants submitted entries in 13 out of 17 categories. “The 2018 edition of the Awards attracted almost 600 applicants,” said Andrew Wrobel, founding partner, strategy and content at Emerging Europe. “The Leaders’ Meeting and Awards is an excellent opportunity for emerging Europe entities to present their outstanding achievements and initiatives.” After the successful launch last year, in 2019 four more categories

have been added to the awards, one of them being the Princess Marina Sturdza Remarkable Achievement Award. In 2018, the first Remarkable Achievement Award for individuals originating from outside emerging Europe was given to Professor Günter Verheugen, who became the patron of the award. “The late Princess Marina, ‘a mistress of reinvention’ — as The Globe and Mail wrote about her in their obituary — ‘a woman who at various times excelled as a journalist in Canada, a senior manager at UNICEF, a fashion executive in New York and a humanitarian who worked fiercely to improve the living conditions

for people in her homeland of Romania’ is absolutely the ideal patron of the Emerging Europe Remarkable Achievement Award for the Region,” added Wrobel. Both Remarkable Achievement Awards are offered by the Emerging Europe Council, which consists of business and political leaders, social activists and artists such as Professor Verheugen, Ivan Mikloš, former deputy prime minister of Slovakia, Ion Sturza, former prime minister of Moldova, HRH Princess Katarina of Yugoslavia, Elisso Bolkvadze, a globallyrecognised Georgian pianist, and Olga Grygier-Siddons, former CEO of PwC CEE.

Princess Marina Sturdza

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vice-president of the European Commission. The Emerging Europe Leaders’ Meeting and Awards will take place on June 27-28, 2019 in London. The event will start with a cocktail reception at the Palace of Westminster (Houses of Parliament).

The full awards programme, which includes keynote addresses, panel discussions and the awards ceremony, will take place on June 28, at the headquarters of the European Bank for Reconstruction and Development. •

Günter Verheugen

In 2018, Emerging Europe ran its own research and published an Investment Promotion Report. This year the organisation will publish its first Business-Friendly City Perception Index. “The awards are, ultimately, about rewarding excellence and highlighting best practice across the region. We want to show the best of the region and we want to help raise standards,” said Mr Wrobel. “Both the Investment Promotion Report and the Business-Friendly City Perception Index have been developed to serve these goals. During the awards we organise an investment roundtable where we share knowledge and experiences.” “One important element which is very often underestimated is the exchange of best practices, and that is exactly what you are trying to do here. We tell each other what we have achieved, how we have achieved it, what our problems are. My strong advice would be to concentrate very much on these exchanges,” said Professor Verheugen, former

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Emerging Europe's contenders

These are the countries, regions, cities, companies and organisations making emerging Europe the dynamic, increasingly successful place it is. Not all will take home an Emerging Europe Award on June 27-28, but they are all doing great things.

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Mobile

DMO Albania

Current Affairs

Citizens across Europe will elect a new European parliament in May, which will in turn select a new European Commission later in the year. If populist and eurosceptic parties do as well as expected, the continent's future could end up being decided by a number of small yet powerful extremists. Further enlargement, not least in the Western Balkans, could be delayed, and plans to tie European funding to respect for the rule of law quietly dropped.

CURRENT AFFAIRS

A VIEW FROM... Washington

In April, key policy planners and makers of the 29 members of the North Atlantic Treaty Organisation (NATO) met in Washington, DC to commemorate the 70th anniversary the North Atlantic Treaty. A NATO looks toward the future, US interests in Europe, perhaps Anthony Kim, Research Manager more so in emerging and valueand the Editor sharing partners in the continent, of the Index of remain vital. Economic Freedom, There is no description. The Heritage In terms of US engagement, Foundation. the peace, stability and expanding prosperity in Europe are every bit as important as the Middle East and the Indo-Pacific, the other two important foreign policy theatres. America’s closest key allies are in Europe, with which the US shares a strong commitment to the rule of law, free markets, and democracy. As well documented, many of these ideas and principles have been brought over by the millions

of immigrants from Europe, and interaction between the US and Europe is strong and vibrant. A stable, secure, and economically viable Europe is in America’s economic interest too. For 70 years since the signing of the treaty, the US military, diplomatic, and economic presence in Europe have contributed to European stability, which has economically benefited both Europeans and Americans. The economies of Europe, along with the United States, account for approximately half of the global economy. The US and Europe are each other’s principal trading partners. The US and Europe are each other’s top source of foreign direct investment. All of this brings untold benefits to the US economy and, by extension, American consumers, producers, and workers.

As history vindicates, since its creation in 1949, NATO has done more to promote democracy, peace, economic prosperity, and security in Europe than any other multilateral organisation, including the European Union. It is essential that the US continues to be an active participant in the Alliance’s future and charts a course for greater future together. NATO is the cornerstone of the transatlantic political-security alliance, but the best way to sustain a strong base is from the bottom up. The foundation of transatlantic relationship requires advancing practical bilateral partnerships that runs across emerging partners and allies in Europe. Going forward, essential efforts should continue in the areas of military, economic, and energy cooperation that should deepen and broaden America’s engagement with Europe.

CURRENT AFFAIRS

Paris

Thibault Muzergues is a politologist and political parties specialist, and author of La Quadrature des Classes.

Since the fall of communism, despite notable economic successes (think of the PeugeotCitroen plant in Trnava, Slovakia or the presence of Carrefour supermarkets), France has only been sporadically present in emerging Europe, as it saw its strategic interests move towards the South (North and West Africa) than towards the East. Th is, however, is changing: since 2007 (and even more since 2014), France has come to realise that it could no longer feign to ignore what was going East of Germany: unsurprisingly, the invasion of Crimea by Russia was a wake-up call for the French, who are now committ ing troops to the Baltic states to defend their NATO allies. But France has also realised that ignoring emerging Europe could

have serious consequences for its status within the European Union. The experience of the period 2012-2015, when Germany looked more to co-operate with Poland than with France inside the EU showed to many French diplomats that the “FrancoGerman relationship” was not the only way forward for the EU – incapable of fi nding long-term allies in Central Europe, French diplomats found themselves isolated, and their influence much reduced as a result. Th is is why France is stepping up its game in the region – and while this does not compensate for 30 years of neglect, it certainly opens up possibilities – in particular for those Central and Eastern Europeans in search of allies inside the EU to address

their fears of being squeezed between Russia and Germany. Here lies the problem though: as seen during the last debates over North Stream II, France’s willingness/capacity to speak for emerging Europe is limited: by its sluggish growth for the past twenty years, by its tendency to prioritise its relationship with Germany above all other European matters, and its own clumsiness: recent comments by Emanuel Macron’s lead European elections candidate, that she would prefer EU structural funds to be spent on energy efficiency in France rather than on “building motorways in Slovakia” is very telling of the paternalism still in place in the French establishment. Th is will need to change if France is to regain influence in the region.

CURRENT AFFAIRS

Vienna

Richard is an economist at the Vienna Institute for International Economic Studies — wiiw.

Walking around Vienna, as in many other big cities in Europe, one feels as if in the midst of a population boom. I first moved here in 2006, and in the years since have seen the city grow rapidly in all directions. The population is several hundred thousand bigger than it was 13 years ago. Whole new districts have been built on the outskirts of the city, and the metro has been significantly extended. Yet while the population is growing, its age structure is changing quite rapidly. Between 1968 and 2004, the age structure of the Austrian population was remarkably stable: around 15 per cent of the population were aged over 65. Since then, the share has risen to 19 per cent, a fairly significant development in such a short space of time. The share of the population of working age has consequently fallen. Austria is by no means exceptional. In the EU as a whole, one fifth of people were aged over 65 in 2018. Ageing populations, combined with generally low birth rates, mean that the working-age population will shrink almost everywhere in the EU in the coming decades. Recent research by wiiw found that we are still only at the beginning

of this trend. Using projections for population developments from Eurostat, we calculated the “tipping point” at which labour demand would match labour supply; in short, when labour will become a constraint on economic growth. Our results indicated particularly important concerns for CEE countries: most EU members in the region will reach this “tipping point” first. Partly, this is because of low birth rates in the last 30 years. However, to a large extent it also reflects the fact they are losing so many workers to countries like Austria (which will delay the day of reckoning for much of Western Europe). Most CEE countries will hit the “tipping point” by 2025. This is an enormous challenge for policymakers and firms in the CEE region, and will become even more so in the future. It will weigh heavily on growth prospects, and put a much greater burden on the health system. There are various policy measures that can be used to attempt to at least delay the “tipping point”, including increasing productivity, fertility, activity rates and immigration. However, there are also problems with all of them. Higher productivity requires more investment, which

may not be forthcoming. Meanwhile higher immigration—at least to the extent that it would significantly change the demographic outlook— is not a politically feasible option for most of CEE. Increasing the retirement age is possible, but in at least some parts of the region, the political direction of travel is currently the opposite. Finally, even if governments are able to increase the fertility rate, this will only pay off two decades from now. It seems clear, then, that the demographic challenges will have to be faced, even if it may not feel like it in capital cities such as Vienna. However, the implications do not have to be all negative. There are plenty of examples in economic history where a relative shortage or higher cost of labour has led to productivity improvements, and eventually substantial increases in GDP per capita. Whatever happens, this theme is likely to define the future of CEE. Expect public discourse to centre increasingly on generational differences, how to fund old-age and child-care, financial incentives to increase fertility, the automation and digitalisation of economies, and how to extend working lives.

Summer skiing in Serbia

Photo courtesy Go Vilnius

European skiers who want to pursue their passion throughout the summer have until now had just a few options: glaciers in France, Switzerland and Austria, which offer skiing 365 days a year, or an expensive trip to South America. A little-known ski resort in emerging Europe however can also now add its name to the list of summer skiing destinations. Kopaonik, in Serbia, recently unveiled the longest artificial ski slope in Europe, nearly a kilometre in length and served by its own chairlift. The piste is made of Neveplast, a product used on artificial slopes around the world made of synthetic bristles designed to resemble a similar surface to hardpack groomed snow.

Vilnius on screen

“Neveplast was born with the intent to give everyone the possibility to ski year round, close to urban centers and at very low cost. Neveplast slopes in cities and on the mountain are considered gyms for skiers where novices can learn to ski and snowboard, enthusiasts can practice their preferred discipline, and where the competitive athlete can train exactly like they do on snow,” reads the Italian manufacturer’s website. The company is also behind a ski track in Jelenia Gora, Poland, used for year-round cross-country ski training and a dry slope on the roof of a power plant in Copenhagen, which will open to the public this summer.

Budapest Monopoly What if you could buy Margaret Island and sell Buda Castle, without going to jail? Just throw the dice in the new Budapestthemed Monopoly, soon to be available in stores for an in initial price of 40 euros. Yes, Monopoly is back, this time with popular Budapest attractions such as the Chain Bridge, Heroes Square and the Citadel. The original version of the game was launched in 1935, with the board depicting Atlantic City. After the World War II, Monopoly was banned in Hungary, as it was against the country's values of the 1950s, but has been available across the country since the fall of communism. The first Hungarian-language version of Monopoly arrived in 1992, focusing on major cities across Hungary. The new game is again produced by Winning Moves, the world’s largest official licensee of Hasbro and the Monopoly brand, the same team who brought you the Monopoly Friends, Game of Thrones and Harry Potter Cluedo games.

When Helen Mirren walks into her home as Catherine the Great in the new HBO mini series named after the famous Russian Empress, she’s not in the actual rooms of the famed Tsarskoye Selo palace just south of Saint Petersburg. She’s actually in the historical Vilnius University Library. This is just one of many secrets shared in a new guide to the Lithuanian capital entitled Vilnius On Screen. It’s a perfect read for those interested in what goes on behind the scenes of the latest productions by the likes of HBO, Netflix, National Geographic, Sky and many others. The guide invites readers to take a deep dive into renowned film and television

titles including War and Peace, Jack the Ripper, the Conductor, and shows them how Vilnius provided the setting they needed to bring their stories to life. “Film aficionados travel great lengths to see the locations of their favourite films,” says Inga Romanovskiene, the director of Go Vilnius, the city’s development agency. “Vilnius has been a screen favourite for a while now and has served as the backdrop for numerous awardwinning films and television series. Vilnius On Screen is a way to show movie fans and industry professionals alike that Lithuania’s capital is a place where silver screen magic happens.”

CURRENT AFFAIRS

olodymyr Zelensky, Ukraine's president-elect, will take office on June 3. His to-do list is extensive. For a start, the eastern part of the country remains occupied by Russian-backed separatists, and daily skirmishes between Ukrainian and separatist forces often lead to a loss of life. Russia’s political and cultural annexation of the Crimean peninsula, despite international condemnation and economic sanctions, looks increasingly irreversible. Attempts to clampdown on corruption have stalled, and further reform of the economy is desperately needed to ensure that growth, forecast by the Vienna Institute for International Economic Studies (wiiw) to reach 2.5 per cent in 2019, does not stagnate. "[Viktor] Yushchenko left office with an 85 per cent negative rating. Ukrainians were so sick of reforms they then elected [Viktor] Yanukovych who promised stability and an end to painful reforms. The switch from [Petro] Poroshenko to Zelensky has been the opposite, Ukrainians now want more reforms," says Stefan Karlo Rajić, an international relations expert at La Trobe University, focusing on Ukraine, Russia and geopolitics. There are few signs that Mr Zelensky has any concrete plans to deal with any of the key issues. “It is difficult to see how fighting corruption can be realistically implemented given Mr Zelensky’s perceived close links to Ihor Kolomoyski, a disgraced oligarch who has been at odds with the regime of President Poroshenko especially since the nationalisation of Mr Kolomoyski’s (essentially bankrupt) PrivatBank in December 2016 – one of the rare triumphs of public interest over

Volodymyr Zelensky

vested oligarchic interests in Ukraine,” says Vasily Astrov, an economist at wiiw. The outsider One of the many things which led to Mr Zelensky’s victory: his reputation as a political outsider, will initially be a handicap. With no backing from any of Ukraine’s major political parties, parliament is likely to be hostile, at least until a general election is held in October. While Mr Zelensky will be hoping that the same wave of populist, anti-establishment sentiment that swept him into office will see a raft of similarly anti-establishment MPs elected, the honeymoon may well, by then, be over. “Ukraine is a parliamentarypresidential republic, and economic policy is – strictly speaking – not in the competence of the president, but rather of the prime minister and the government in general (the president only appoints a foreign minister and a minister of defence). The future of

economic policy therefore remains clouded, and will largely depend on the results of the upcoming parliamentary election,” adds Mr Astrov. Some analysts believe that parliament is in fact Ukraine’s biggest problem. “The key source of dysfunction in the country’s politics since independence has come not from the president’s office but from the fact that the Ukrainian government is far too involved in the economy. Foremost among Ukraine’s problematic institutions is the Verkhovna Rada, its legislature,” says Christopher Hartwell, a professor at Bournemouth University. The Poroshenko legacy Mr Poroshenko will be just about the first Ukrainian president to ever leave office without being forced out, without crying foul and without slandering his successor. Indeed, he has suggested that he will offer Zelensky support as well as

CURRENT AFFAIRS

Petro Poroshenko

constructive opposition. He has vowed to stay in politics. He leaves behind a mixed record. Ukraine emerged from a recession in his first two years in office to hit steady if modest growth rates in the past few years. Mr Poroshenko also made progress with making state procurement more transparent and decentralising of government decision-making and spending, and in late 2018 he secured the independence from Moscow of Ukraine’s Orthodox church. However, reforms made during the first two to three years of his presidency, which were mainly implemented under pressure from Western donors and civil society, failed to meet the public’s needs. “Not only did they not lead to an improved quality of life, but they actually led to a decline and the emigration of around two million people,” says Tadeusz Iwański from the Centre for Eastern Studies. “Painful reforms, initiated but unfinished, and increasing political instability exacerbated the public’s already critical attitudes towards the political class. Just before the presidential elections, only 23 per cent of respondents expressed trust in the president, 12 per cent in parliament, 19 per cent in the government, 12 per cent in the courts, and 15 per cent in the prosecutor’s office.” It was this popular discontentment with the political class which paved the way for Mr Zelensky’s election. “The huge distrust of state institutions and politicians resulted in a search for ‘new faces’, people from outside the establishment who were not disgraced, who were untainted by corruption and could meet the public’s diverse expectations,” adds Mr Iwański.

“Moscow has already started sending strong signals about its expectations of Zelensky,” adds Gic. “Russia’s primary objective is to impose its interpretation of the Minsk accords on Ukraine in order to escape responsibility for its aggression, and to gain powerful tools for direct interference within Ukraine’s domestic political decision making.” Wiiw’s Vaslily Astrov agrees. “Mr Zelensky’s room for manoeuvre will be constrained by the fact that the implementation of Minsk agreements is largely seen in Ukraine as a betrayal of national interests,” he says. Russia Mr Zelensky has sought to “Poroshenko, an educated multi- reassure Ukraine’s key partners billionaire with a strong background that he is not soft on Russia. Just days after his election, in public office, had the experience Ivan Aparshyn, a security and resources to withstand adviser on Mr Zelensky’s team the pressure of pro-Russian told reporters that security and oligarchs and political forces,” defence forces “will continue their says Ariana Gic, an independent intensive cooperation with NATO political analyst, who believes that and relevant EU organisations.” Russia is “a clear beneficiary” of Mr Aparshyn also hinted at doing Mr Zelensky’s election. Russia's president Vladimir Putin away with military conscription, responded to Mr Zelensky's election hugely unpopular amongst young by signing a decree which simplifies Ukrainian males. It is telling, however, that one of the process of applying for Russian the first invitations Mr Zelensky passports for citizens of Ukraine received from the international living in the occupied Donetsk community was from NATO’s and Luhansk regions, an offer later secretary general, Jens Stoltenberg. extended to all Ukrainians. This NATO will be seeking reassurances brought immediate condemnation that the new man is as unwavering from Mr Poroshenko, but initial in his anti-Russia stance as silence from the president-inM Poroshenko has proven to be. waiting. It took a few days for The vast majority of those who so Mr Zelensky to respond with a enthusiastically voted for him will counter-proposal, in which he suggested that Russians could be be doing the same. • offered Ukrainian citizenship.

EMERGING POLITICIANS

CURRENT AFFAIRS

On these pages we provide a channel for young politicians from across emerging Europe to share their vision of the kind of Europe they want to create. All of the young people whose voices we feature are unblemished by their countries’ communist-era pasts. Where the current generation of older politicians has often failed, it is our hope that this young, free and enlightened generation will succeed. Emerging Europe is delighted to be able to offer them a platform from which they can communicate with a wider audience outside of their home countries.

industrial revolution and others. All these are a normal part of our lives with challenges that are taken for granted. the media were interested in. Lithuania is among the first EU One and a half years later, no member states to deliver the national one is interested. Indeed, this is artificial intelligence strategy, and because politics is a battle of ideas. the Lithuanian Industry Digitisation The public may have confidence Roadmap is very much appreciated in politicians not just because they by the European Commission. are old or young and not because Aware of the power of convergence they have a lot of experience or are newcomers to politics. It is the ideas between information technology they bring to the political field that and biotechnology and of their impact for future economies and make the public trust them. Politicians are judged by how they societies, we have worked out and have already started implementing were successful in implementing a life sciences strategy in Lithuania, these ideas. In the World Bank’s Doing Business ranking, Lithuania which provides that life sciences will make up five per cent of GDP placed 14th last year, which is in 2030, which is five times more both the best result in Central and Virginijus than now. Eastern Europe and the highest Sinkevičius (29) is the Lithuanian But it’s not only societies and ranking in the history of Lithuania. minister of economy businesses but also governments and Last year, Lithuania took a major and innovation. the public sector that must undergo step forward in implementing innovation reform, which will help changes. Lithuania has already taken ithuania’s cultural unlock national scientific potential the first steps towards the creation environment naturally does of the GovTech Lab, which means for the development of exclusive not allow for distinction possibilities for young, innovative products. And the solutions between generations, be it politics businesses to develop and test implemented aimed to improve or the private sector. Historically, the start-up ecosystem have enabled solutions tailored to the needs of Lithuania has always been a cultural start-ups — which are the country’s the public sector. During a meeting crossroads where people from with Sundar Pichai, CEO of future — to attract the maximum different cultures, practicing Google, I invited him to join this amount of investment. various religions and having Lithuanian initiative. The only advantage, as a rule, different attitudes meet; therefore, Indeed, I can only assure you that enjoyed by the majority of openness for ideas coming from everything I am telling you about young politicians is the fact that diverse environments is a condition in psychological terms the distance Lithuania would be impossible if of natural balance in which politicians of the older generation between them and the challenges Lithuanian society lives. did not have the same innovationof today’s global world is relatively On the day of my appointment based culture and if they did not small. A lot of people who are as minister of the economy and understand its value. Politics is not in their thirties now have grown innovation, the fact that I was a debate, politics is an ability to find as individuals and professionals the first member of government solutions. And finding solutions is surrounded by phenomena like to have been born in independent only possible when discussing with artificial intelligence, blockchain, Lithuania was the only thing the opponents who understand the financial technology, the fourth

Virginijus Sinkevičius

CURRENT AFFAIRS

challenges of the future economy. Today, Lithuania’s political environment is oriented towards making progress. We discuss measures and argue about methods but we agree on the vision we have: Lithuania is a European country, a member of NATO with more than two per cent of GDP dedicated to national defence, and we are among the leaders in innovation in Europe. •

are beginning to appear. Not long after my election, our team succeeded in enforcing a significant increase in the transparency of the city by allowing public access to audiovisual records from all meetings of the city assembly and ensuring the personal responsibility of city representatives for their decisions by introducing a roll-call vote in the city's representative bodies. After these first successes, I focused on raising awareness among the Brno public and subsequently on the active involvement of people in deciding how money was spent, in the form of participatory budgeting. I introduced the first fully electronic process of participatory budgeting and achieved the highest public involvement in public administration in the history of the Czech Republic. Brno‘s model of participatory budgeting was so successful that I began to give lectures about it at a number of conferences, as well as at Czech universities and colleges, providing solid groundwork and inspiration for expanding participation in dozens of Just 26, Tomáš Koláčný cities across the whole country. has been active in Czech politics for more Another major project that than eight years. He is I have been involved in is currently the deputy mayor of Brno. the construction of the first fully electronic portals of public services for citizens, providing he primary incentive for my authenticated identity management for wireless communication with entry into Czech politics the authorities and the utilisation was the total failure of of urban services. the traditional political parties to My latest objective is to coordinate the country's transition significantly expand the scope to the 21st century information of public participation in society and the subordination the management of public affairs of Czech politics to the interests and direct communication of business corporations (usually between the public and the multinational) to the detriment authorities. The project foresees of citizens' interests. the creation of an electronic It was precisely the change petition and inquiry tool for the in political culture and public, which will be based on the transparency of the public identity management and will administration environment, at the time full of behind-the-scenes enable the surveying of attitudes agreements and lobbying that were of a significant part of the Brno public to key political issues, while my priorities at the beginning of ensuring feedback on the activities my political career, and thanks of the municipal government. to my firm opinions and active attitude to work, the first successes Another important project is the

Tomáš Koláčný

digitisation of the city's agenda, based on the proviso that electronic information, and not citizens holding stacks of papers, should circulate around municipal offices. The Brno City Municipality is in fact housed in eight separate buildings, which are hundreds of metres apart from one another, and the goal of the project is, in addition to saving millions of sheets of paper per year, also to save tens of thousands of person-hours a year related to forced journeys of civil servants among all those buildings. In addition, in the framework of my responsibilities, I deal with the implementation of project management, or the coordination of the implementation of two major strategic investment projects – a concert hall and a centre for creative industries, in addition to a number of other activities. Consequently, if I am to finally sum up my life in politics, I am pleased to say that I see a significant shift in politics (at least local politics in Brno) towards openness, transparency and responsibility, which gives my work real meaning. I am also very glad that young people's awareness and interest in political topics is gradually growing, thanks to which Czech politics has a chance to keep pace with global trends. I will be happy if I become an inspiration for other young people who will become actively involved in determining the direction of politics and governance of public affairs, and especially if the young generation's interest in politics leads to the suppression of the authoritarian tendencies of some political veterans. That does make sense! •

CURRENT AFFAIRS

Hate speech or free speech? Combatting hate speech in Poland will be a long-term project, with many extremists claiming that their right to say whatever they like – about whoever they like – trumps any right not to be offended. WORDS SHAKHIL SHAH

ate speech has been making the headlines in Poland ever since the brutal murder of Gdansk Mayor Pawel Adamowicz at a charity event in January. Mr Adamowicz had been the mayor of the city for over 20 years and had become known as a liberal in a very conservative country. He welcomed migrants and spoke out in defence of Poland’s LGBT community. “He learned his whole life, he matured and evaluated. He found that many groups in Poland are severely discriminated against. That was the reason he wanted to support minority groups and migrants," says Magdalena Adamowicz, the wife of the former mayor and an independent candidate in the upcoming European parliamentary elections. Hate speech globally is intertwined with politics, and through fear-mongering political parties driving fear. So much so that the United Nations Alliance of Civilizations (UNAOC) back in 2015 launched the #SpreadNoHate initiative. “As the number of migrants and refugees continues to rise worldwide, so do anti-immigrant and anti-refugee rhetoric and examples of harsh treatment of these communities. There has been a sharp, global increase in incidents of both governments and individuals using hate speech against migrants and refugees, blaming them for their nations’ struggles. The words used in politics, in the news, and in social media have consequences. As history has shown, rhetorical excesses can give rise to a climate of prejudice, discrimination, and violence,” reads the UNAOC’s website.

A right to be offensive? While many try to stop or prevent hate speech, there are several issues with trying to do so, in particular the danger of limiting the fundamental right to freedom of speech. Poland’s Constitutional Tribunal in 2014 stressed that freedom of speech protects not only statements that are received favourably or perceived as harmless or indifferent, but also statements expressing disapproval, dislike, prejudice or antipathies. The Constitutional Tribunal stated that "the criminalisation of incitement to hatred on the grounds of national, ethnic, racial or denominational differences is undoubtedly a limitation of the freedom of speech, one of the basic human freedoms more important for its development and self-fulfilment and of fundamental importance for democracy. This limitation, however, fulfils the requirement of statutory regulation and is necessary in a democratic state for its security, public order and the freedoms and rights of others, especially on the basis of race, sex, language, religion or lack thereof, social origin and property. " The sanctions provided for by Polish law for spreading hatred meet sound standards, allowing on the one hand prosecution in those cases where the freedom of speech was exceeded, and on the other hand leaving the court to assess whether the given behaviour was indeed within this constitutional freedom, explains Krzysztof Nowiński, a partner at KNS Legal. Changing the law is not an easy feat, and cannot be done overnight. That is why a lot of the steps taken in Poland over the last few months, since Mr Adamowicz’s death -

especially by local governments have been met with opposition from various groups. “The leaders of many Polish cities have taken initiatives to start workshops on hate speech and discrimination. In Poznan, the teacher's guide indicates that organisations such as the Campaign Against Homophobia, Feminoteka, the Anti-Discrimination Education

The issue that many bring up is that the approach taken focuses on minorities, immigrants, people with a different colour skin as well as LGBT minorities and feminists. “The criteria of this persecution are often determined by their [rightwing organisations etc.] activists in a way that clearly violates the rights of others, for example parents to raise a child or the right to religious freedom, also ignoring actual discrimination against children from large families, the poor or prolife campaigners,” adds Dr Bryk. The role of the church While talking about changes in legislation and or actions taken by local governments are all well and good, the biggest challenge is changing public opinion. Unfortunately, in that regard, the Catholic church in Poland still has huge influence over many people in the country. In March 2019 the Polish Catholic church released documents which showed that Polish clergymen had sexually abused hundreds of children since the 1990s. While the documents were shocking, the church still asked for mercy to be shown. Archbishop Marek Jędraszewski stated that: “the church must be impeccable and firm in stigmatising evil. But it must also show mercy to the perpetrators if they strive for internal transformation.” Not only did the church ask for mercy, according to reports the “archbishops speaking at a news conference emphasised that paedophilia was not limited only to the Catholic church and that most abuse took place in families.” Further proof of the influence of the church came later in March, when an evangelical group published pictures [which have since been removed] of a priest leading Association and others promoting Aggravating the issue the burning of books outside a church gender ideology are competent to - including Harry Potter titles, seen by conduct such activities. In Warsaw, As Dr Bryk explains, the steps some as promoting sorcery. the mayor himself recommended taken by local governments While not all priests in Poland the Council of Europe’s Bookmarks. have in many cases aggravated share these sentiments, the old A manual for combating hate the issue. saying that a fish rots from the head speech online through human rights “They have provoked protests down comes to mind and changing education, and COMPASS, a manual from right-wing organisations these views and influencing equality on human rights education and a large number of parents. for young people,” explains The head of the Family Life Centre and the abolishment of hate speech in Poland is going to be a huge and Andrzej Bryk, professor of law at the warned that the materials define Jagiellonian University in Krakow. hate speech in an ideological way.” long-term project. •

CURRENT AFFAIRS

Is the Eastern Partnership still relevant? The Eastern Partnership (EaP), a joint policy initiative of the European Union and six former USSR countries - Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine - is marking its 10th anniversary. As Dominik Istrate reports, however, some EaP countries are moving closer to the EU faster than others. WORDS DOMINIK ISTRATE

he EU’s efforts to initiate a multilateral dialogue with its Eastern neighbours started with the first Eastern Partnership Summit in 2009. Looking back on the past 10 years, there have been remarkable developments resulting in stronger cooperation in a number of areas. “With Ukraine, Georgia and the Republic of Moldova we have concluded Association Agreements and developed Deep and Comprehensive Free Trade Areas, as well as visa-free regimes. EU-Armenia relations benefit from the Comprehensive and Enhanced Partnership Agreement. Negotiations on a new agreement with Azerbaijan are nearly completed. With Belarus, we engage in the framework of a Coordination Group. This has led to positive results in terms of trade, connectivity, education

and people-to-people contacts, and also helped to strengthen the resilience of our partners who continue to face major security challenges,” Thomas Mayr-Harting, managing director for Europe and Central Asia in the European External Action Service told Emerging Europe. Though relations are maintained at different levels, all six partner states continue to aspire for stronger bilateral relations.

the EU’s democratic standards, something which is crucial for the EU as a value-oriented actor. “A great deal still needs to be done to promote the rule of law and good governance, combat corruption, move forward on justice reform, provide the necessary space to civil society, and ensure the freedom of the media,” Mr Mayr-Harting said, adding that the Partnership can only thrive with common principles and values. While Challenges the EU continues to support democracy, press freedom and In 2015, EaP leaders agreed human rights in countries such on moving forward with as Belarus and Azerbaijan, it has the cooperation in accordance always respected the sovereignty with what are known as the Riga of the partner states and focused priorities: stronger economy, better on transnational challenges where connectivity, stronger governance progress can be made. and stronger society. Without In the meantime, civil society question, the latter two have been faces many challenges across overshadowed by the fact that not the whole region. “All EaP all EaP countries are in line with countries, perhaps with the exception of Armenia since the revolution of 2018, have been backsliding in this area and are copying the negative practices towards the civil society country by country, especially during pre-election periods. We have witnessed such developments in frontrunner Georgia, in Moldova, and in Ukraine as well. The situation in Azerbaijan and Belarus is even more complicated,” Natalia Yerasevich, steering committee director of the EaP Civil Society Forum’s Secretariat said, noting that the EU should design a bolder policy approach and provide civil society with enhanced political backing. Aside from saying that the Eastern Partnership has brought positive developments to the region, Hennadiy Maksak, head of the Foreign Policy Council of Ukrainian think tank Prism, argues that the EU’s Eastern

neighbourhood tool initially did not bring the declared prosperity and stability to all six partners. “There were three core flaws,” he says. “First, in Brussels, there was an underestimation of Russia’s readiness to block the effective movement of the EaP partner states towards the European Union. Second, it was rather discouraging for partner states to engage in the approximation process with no prospect of EU membership at the end of it. Third, the postSoviet mentality was still strong among elites in the EaP countries, and this negatively influenced the delivery of reforms, especially in areas of public administration, anti-corruption and human rights protection.”

CURRENT AFFAIRS

The Russian shadow Simultaneously with the Partnership going forward, Russia felt more and more threatened by an EU format involving former Soviet states, leading to the foundation of the Eurasian Economic Union in 2015 that now includes Armenia, Belarus, Kazakhstan and Kyrgyzstan, under Russian leadership. “Once the benefits [of the EaP] were becoming visible and attractive, the Kremlin altered its policy – launching its own Eurasian Union, also based on a customs union. This shift indicated that Vladimir Putin was prepared to do whatever it took to bring the member states of the Eastern Partnership back into Russia’s fold,” former Polish foreign minister Radoslaw Sikorski and former Swedish prime minister Carl Bildt both told me, adding that Russia’s motivations were not of economic, but geopolitical nature. In their view, despite the continuous Russian aggression in Ukraine, the most remarkable fact is that Russia failed to destroy the Partnership. Moreover, the two former statesmen argue that a few years after Armenia and Belarus, which are also EaP countries, joined the EAEU, they are becoming less interested in the Russia-led economic alliance. Both Mr Bildt and Mr Sikorski believe that in Yerevan and Minsk there is a renewed interest

in cooperation with the EU and the Eastern Partnership. While Russia views the EaP as a political alternative for its neighbours, it is a tool of neighbourhood policy, not enlargement policy for the EU (the same applies to the Southern Neighbourhood, the EU’s other main policy tool with 10 North African and Mediterranean countries). From this aspect, Ukraine undoubtedly stands out: the country has taken a strong turn from Russia during the 2014 Maidan revolution and aims for integrating into Europe. However, the Eastern Partnership was not the only way to go for Ukraine on this path. “Ukraine considers a bilateral track with

the EU as something that goes beyond the EaP, something more ambitious and aim-oriented. While referring only to the multilateral EaP format, one might say it is not of much pratical value. But altogether, bilateral and multilateral tracks brought Ukraine closer to the EU, albeit not yet to the desired level,” Mr Maksak adds. To celebrate the 10th anniversary, EaP leaders will meet in Brussels later this summer for a landmark summit to assess the framework and discuss future relations beyond 2020 in line with the Riga priorities, in a very public display of the fact that the Partnership’s significance has not decreased at all, despite the many and very real challenges being placed in its path. •

Business

Romania's Dacia, owned by Renault, is one of emerging Europe's greatest success stories. Since the French group bought a majority stake in the ailing carmaker in 1999 the Dacia brand – at the time unknown outside Romania has become a byword across Europe for affordable reliability. The Duster SUV model, first launched in 2010, has powered Dacia's growth, so much so that in the first quarter of 2019, Dacia outsold Hyundai and Kia in the EU, to reach a 3.7 per cent market share.

C O V E R

BUSINESS

S T O R Y

wo subjects occupied the UK's newspapers in the spring of 1989. One was the internecine conflict within the ruling Conservative party over whether or not Britain should embrace the coming European Single Market (oh, how little has changed), while the other was China, which in the midst of the Tiananmen Square protests looked to be on the brink of civil war. It therefore went almost unnoticed that on June 4, the same day that the Chinese army finally, brutally dispersed demonstrators from Tiananmen Square, the trade union Solidarity won an overwhelming victory in a partially free election in Poland, paving the way for the peaceful fall of communism in the country later that summer. The partially-free election (which preserved a majority of seats in parliament for the Polish Workers' party and its allies) had been the compromise outcome reached during two months of negotiations between Solidarity and the government held in February and March 1989. Known as the Round Table Negotiations, they were convened by Poland’s leader General Wojciech Jaruzelski in response to nationwide strikes which were crippling the country’s economy. Mr Jaruzelski’s hope was that he would be able to draw prominent members of the opposition into the ruling

elite without changing the overall political power structure. In reality, the talks led to radical changes in Polish government and society, and had continental repercussions. “The Berlin Wall fell because Poland started off the process,” says the country’s current president, Andrzej Duda. His prime minister, Mateusz Morawiecki, a member of a radical wing of Solidarity, was against the talks at the time, but admitted that they opened a new dialogue platform and introduced democracy into public life. “I am happy with the way that events in Poland have evolved, but I still feel that a more uncompromising stand by Solidarity could have perhaps forced bigger concessions from the communists.” Regardless, by the end of year, Solidarity leader Lech Wałęsa had become the first democratically-elected leader of Poland. Six months later communism had been swept away across what would become known as emerging Europe. With the notable exception of Romania, the process was by and large peaceful. Developed markets Since then, Poland has become an increasingly prosperous country which in 2018 was reclassified by global index provider FTSE Russell from 'emerging' to 'developed' market status, joining a group of the most developed economies

of the world including the US, UK, Germany, France, Japan, and Australia. Poland was the first Central and Eastern European country to be reclassified to developed market status, but will not be the last. For Poland, and indeed much of emerging Europe, it was membership of the EU – achieved on May 1, 2004 – that provided the launchpad towards developed market status. For countries across the region, joining the European Union held the implicit promise of economic convergence to Western European standards of living. Fifteen years after the 2004 accession (when the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, as well as Cyprus and Malta, became

EU members) this expectation has largely been met. Access to the single market created new business opportunities, triggered vast capital flows to the new member states and facilitated their integration into global supply chains. The catchingup process gained additional impetus during the accession talks and again upon joining the European Union. Though a significant gap remains today, it is shrinking at a rapid pace. "Central European countries are now living in golden times," says Filip Dvorak, the managing director of BASF Czech Republic. "As an example, Bratislava and Prague are amongst the top seven richest areas in Europe." On average, GDP per capita (at purchasing power parity)

in the new member states has risen 250 per cent since 2000, compared to 50 per cent for the EU as a whole. This trend is visible across the board. GDP per capita in all the new member states has quickly converged towards the EU average and is now above 70 per cent in all the countries that joined in 2004. Nominal compensation per employee has converged towards the EU average in all the new member states and has risen particularly quickly in the Baltic states, so much in fact that in March 2019 Estonia reported that significant numbers of its citizens who had previously emigrated to Finland are now returning home, attracted by rising wages.

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Zuzana Čaputová

BUSINESS

Giving up five per cent of sovereignty There have been other benefits of EU membership. Unemployment rates have fallen, the number of people in further education has risen and governance has improved. Billions of euros have been spent on infrastructure projects designed to link emerging Europe with the rest of the single market. European Union membership – the goal, since 1989, of all emerging European nations – has been unquestionably positive. Why then, the current eurosceptic backlash? According to Boris Vujčić, the chairman of the Croatian National Bank, it's certainly not a question of lost sovereignty. “Yes, the EU does mean handing over some sovereignty, but no more than five per cent," says Mr Vujčić, who led Croatia's accession negotiations ahead of its own entry to the EU in 2013, "but then think about everything you get in return! Then look at Finland, look at Portugal. These are two countries which are different in almost every way, but both are EU members. They prove that it is possible to be a member of the EU and still be very different. The idea currently being pushed by the populists that being in the EU means losing your national identity is ridiculous.” Erik Berglof, director of the Institute of Global Affairs at

the London School of Economics and Political Science (LSE) believes that populism is being fed by growing inequality. "Income convergence has been uneven," he told a high-level conference in Vienna in April dedicated to the 15th anniversary of the EU's eastern expansion. "The high demand for workers in advanced economies has exacerbated negative demographic trends. Medium-skilled jobs are disappearing leading to a polarisation of jobs which increases inequality. All of these things feed populism which in turn can lead to a reversal of reform and deter investors." Mugur Isarescu, who has been at the helm of the Romanian National Bank for more than two decades, feels that gaps in convergence are a country level problem. "Without resolute structural reforms at the local level it is only natural that some countries will not benefit from EU membership as much as others. There is no substitute for coherent macroeconomic policy," he says, in what could be construed as a veiled dig at the current (eurosceptic) Romanian government's chaotic economic policies. The blame game Another school of thought is that the European Union has become a convenient scapegoat for unpopular decisions in member states.

"It is politically easy to blame Brussels," says Mateusz Szczurek, a member of the European Fiscal Board (EFB)."In my time in the [Polish] finance ministry, I was careful never to do this. I never said that we need to take unpopular fiscal or budgetary decisions because Brussels wants us to. I always explained that we were taking these decisions because they were good for us. To do otherwise leads to Brexit." Mr Szczurek, who combines his role at the EFB with an associate directorship at the European Bank for Reconstruction and Development (EBRD), also has advice for would-be EU members, particularly in the Western Balkans. "When it comes to the application of EU rules," he says, "make your reforms now. Don’t carry out your reform after you join the EU. Then it becomes too easy to blame the EU, something which is incredibly damaging in the long run." Mr Szczurek believes that the EU provides member states with what he calls a "wonderful" set of macro-economic tools that makes them unbeatable. If, of course, the will to make full use of them exists in member states. Europe's election Elections for the European parliament, scheduled for May 2326, will be a test of how deep-rooted anti-EU sentiment has become across the continent, not just

in emerging Europe. Eurosceptic parties are expected to do well. However, the election in March of the staunchly pro-European, anti-corruption campaigner Zuzana Čaputová as president of Slovakia, as well as a resurgent opposition in Poland, including a newly-founded liberal party, Spring, suggests that the eurosceptics will not have things all their own way, however. "Čaputová's victory has certainly given heart to progressive parties, especially Momentum in Hungary," says Zselyke Csaky, research director for Europe and Eurasia at the Freedom House think-tank. "The opposition in Poland is also well-placed in opinion polls and could even gain more votes than the ruling Law and Justice party. But eurosceptic parties will still do well. I am cautious about seeing Čaputová's victory as a turning point, especially as the murder of journalist Jan Kuciak - which galvanised the opposition –

makes Slovakia something of a special case." Csaky is also doubtful as to how real much euroscepticism in emerging Europe actually is. "Migration aside, [Hungary's PM Viktor] Orbán has always voted with the European mainstream," she tells Emerging Europe. "He likes to talk about faceless Brussels bureaucrats but only in the sense of highlighting how much he wants to reform the EU, to create a Europe of nation states. The euroscepticism of Poland's ruling party is much the same." Ultimately then, the strength of euroscepticism in Central and Eastern Europe may have been overplayed. Günter Verheugen, the German politician who was European Commissioner for Enlargement from 1999 to 2004 and who did as much as anyone to make the 2004 accession happen, certainly thinks so, in Poland as much as anywhere.

"I am not worried about euroscepticism," he told Emerging Europe. "Look at Poland for example. No country in history has fought harder for its freedom. They are not going to give it up now." Nor, indeed, will any of the emerging Europe states. The European Union may provide populist parties with a convenient scapegoat and may often feel the full brunt of their nationalist rhetoric, but not a single mainstream party anywhere in the region has yet called for withdrawal. They know full well that ordinary citizens – so many of whom took to the streets in 1989 - would not stand for it. Instead, the EU will remain a guarantor of peace and prosperity in an uncertain world. When, in 2034, we come to mark the passing of another 15 years since that historic 2004 enlargement, we will find ourselves living in an EU that is larger still. Brexit – should it ever happen – will be a one off. •

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Defence spending: it’s all about the security guarantees The countries of emerging Europe are increasingly looking to develop local defence industries in order to ease the reliance on imported arms capabilities. There are exceptions, however, with US tech still often being preferred. WORDS SHAKHIL SHAH

he importance of developing and upgrading a country’s defence capabilities is a given, and the armed forces have become an indispensable part of most nations globally. Countries will spend billions upon billions of euros to develop their defence capabilities annually. This is increasingly true for countries in emerging Europe, and a number, such as Bulgaria, the Czech Republic, Poland and Romania have all increased spending over the last decade. The question at hand has to do with who provides the best options and could help develop a nation’s own defence manufacturing industry. While there is no correct answer to this, Francis Tusa, a defence journalist with over 30 years experience in the industry and the person behind Defence Analysis, explains that there are two distinct routes to take. Firstly, when it comes to the transfer of technical knowhow and investment in local industry, it would appear that

European manufacturers are better placed to help develop the local supply chain. A great example comes from Airbus, which in 2016 opened a manufacturing facility in Romania. “In 2016 Airbus opened at IAR Ghimbav, near Brașov, a manufacturing facility for H215M helicopters. The European giant has shifted the entire production line for both the civilian and military versions of the H215 helicopter from France to Romania,” writes George Visan, security programme coordinator, at ROEC, in a special report, The Known Unknowns of Romania’s Defence Modernisation Plans. However, as he points out, sometimes, even huge investments such as this do not always provide a favourable outcome for companies when it comes to new contracts, “Surprisingly, Romania has expressed a strong preference for acquiring US-made helicopters. The preference for US-made helicopters has to do with Romanian forces first hand operational

experience in Afghanistan and Iraq while among government and military officials it is felt that the American rotorcraft are superior to European ones.” According to Mr Tusa, European defence companies are known for contributing and investing in local markets, and by doing so creating local factories to manufacture components for their products: “European export offerings tend to be very strong on tech transfer - Saab is a world leader in this. The fact is that if you do buy something like the Patriot System, you may get to produce a few circuit boards, all the rest comes out of Massachusetts. Whereas the French were offering some quite serious technology and workshare [in reference to the MBDA- Aster 30-SAMP/T], they were offering more missiles for approximately 60 per cent of the price of the American system,” explains Mr Tusa. “If Poland would have bought the Aster system, they would have joined the family and would have been given in perpetuity

significant aspects of that weapon, they will not get that with Patriot,” adds Mr Tusa. Fighters Another interesting aspect is the fighter programmes. “There are two countries that interest me in terms of fighter, and those are Poland and Finland. Both are slanted towards the F-35. Poland has said that it wants to buy fifth generation aircraft, which by the way is a Lockheed Martin patented marketing slogan. If you dominate the language you have won 75 per cent of the battle. Both have said they want stealthy aircraft and if they define stealth as meaning the F-35 then you have to buy the F-35,” explains Mr Tusa. The second aspect has to do with security guarantees, where the US appears offer the best option. “If we look at Germany, with Nord Stream II, my opinion is that eastern European countries look at it and feel that they cannot trust the Germans as they could be fatally compromised,” adds Mr Tusa. He goes on to explain that the once proud German military is not as strong as it once was: “they have a fleet of approximately 130 Typhoon jets of which around 30 are operational. Even the most optimistic estimate

from Germany of when they “Skills do matter - but often will get their availability rates of the cheap labour costs enable equipment up to sensible standards emerging European players to is 2025.” become part of a wider SC by starting at the bottom, and then Russian aggression gaining skills. Examples would be of Romanian shipyards doing the Mr Tusa believed that if tough labour on hulls for Dutch the Russians were to increase frigates - not very sexy work - but aggression over the next seven they learn the skills they need to years or so, countries like move up the chain. Equally, they've Germany may not be in a position also done work for Airbus on to help. That is why the issue of helicopter upgrades,” Mr Tusa adds. a security guarantee has become For countries like Poland and paramount, hence the pivot to Romania, as well as the Baltic American tech. countries that share boarders with “It has to do with one thing Russia, growing tensions make it and one thing alone: buying a US inevitable that they would buy into security guarantee [it is implied US products if only for the security but not written],” Mr Tusa tells guarantee. The offering provided Emerging Europe, adding that by American companies such as “there is a belief that by buying Lockheed Martin or Bell may not be a multi-billion dollar system like as cost effective as those provided Patriot, if you are going to be by their European competitors. threatened, Uncle Sam will come However, the biggest advantage is to your aid, if only to avoid the the armada that sits behind the US embarrassment of the Russians when it comes to times of war. - and it’s the Russians, let’s be “There are a few trends that go honest - capturing all your kit.” across all the products, whether Yet if we track back to what you talk about missiles, fighter emerging European countries jets or helicopters for example. need to be doing to become a part Even if European companies offer of the global supply chain (SC) more kit, equivalent if not greater there may be some advantages to capability, earlier delivery and the region such as cheaper labour industrial participation, they still costs. However, there is also pick American systems due to potentially a lack of skilled labour the security guarantee that comes for this specific industry. with it,” concludes Mr Tusa. •

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Made in emerging Europe Our quarterly look at some of the region’s most innovative companies.

CastPrint Out with old heavy plaster casts for broken or fractured bones, and in with Latvian CastPrint's innovative solution to the way casts are made. “Although technological progress is present in all other areas of medicine, fracture treatment has been left unchanged for almost 200 years. The fact that specialists agree on a number of flaws and disadvantages of the Plaster of Paris casts clearly show a need to innovate this area of medicine.” Using the latest 3D scanning and printing technology CastPrint plan to revolutionise the way treatment is handled. 3D surface scanners allow capturing real-time

3D models in a couple of seconds which can then be printed in a wide range of materials. The company uses an environmentally friendly polylactic acid plastic material that is approved for use on skin. CastPrint also develops personalised fixation solutions in cooperation with the most progressive traumatology specialists in Latvia. The company claims that their solutions are “not only lighter, they are custom made for each patient, and they will also improve the patients recovery experience by providing such basic functions as air access to skin and ability to apply water to the cast.” castprint.co

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Unior: Multi-Tool With winter now behind us, it's time to dust off your bicycle and hit the trails, but there is always a chance that your bicycle gets damaged while out and about or you need to adjust it on the fly. Carrying around a heavy tool kit is not an ideal option and while multi-tools for bicycles are nothing new, Slovenian outfit Unior has been making huge advances in the cycling world, partnering with

OmoLab OmoLab, a Croatian tech company, has designed an app called the OmoReader. While you may be wondering what is so special about another e-reading application, but in this case the app is designed to help people with reading disorders. OmoLab founder and director Petar Reic, explains that “the application facilitates efforts of dyslexic persons to read, and breaks down words into smaller segments and highlights them with the aim of making reading easier.” The OmoReader is their latest project, yet it all started out with OmoType, a script designed and customised for people with dyslexia and other reading difficulties, combining a visually pleasing font which can be adapted to the unique needs and preferences. omolab.com

big teams like Trek-Segafredo, Quick-Step and Movistar. There are four different models in the Euro Multi-Tool line-up, from basic models (EURO6 or 7) to the EURO17, the fully equipped set with everything from a chain tool to valve core remover. Now there is no reason to be caught without the right tool for the job when out for a ride. uniortools.com

StethoMe

BUSINESS

Coughing, a runny nose, a fever? Should you call the doctor immediately, or should you wait? A new Polish device, StethoMe, could revolutionise the way we diagnose our children and ourselves. With the device you can examine your child without leaving your home and send the results to your doctor, who then decides what to do next. The StethoMe device is the first medical diagnostic device of its kind – one that monitors the respiratory system in a precise but user-friendly way. stethome.com

VeeMee Ever wondered where the produce you are consuming comes from? Wonder no more. An app/ platform from Croatia aims to do just that; VeeMee, founded in 2017, is a digital platform for the agricultural and trading sector. With just a few clicks on your smartphone, you can find out about the manufacturer/producer as well as trace the origin of the product.

However, VeeMee does not only help consumers: for manufacturers, it aims to increases production, continuity and strengthens brand exposure, for suppliers, it assures a reliable producer and full traceability of goods. All this can be done by simply scanning the QR Code on the product. veemee.eu

Innovation Q&A: Stefanini Emerging Europe talks to Razvan Tapu, head of the digital transformation centre at Stefanini EMEA. WORDS ANDREW WROBEL Razvan Tapu

According to a recent study by Oracle and Future Workplace, 93 per cent of people would trust artificial intelligence (AI) to make decisions for them at work. I know that Stefanini has developed Sophie, a corporate AI agent based on cognitive computing and artificial intelligence, how will robots transform the workplace in the next decade or two? Robots will become a standard element of the workplace of the future, co-working with humans. AI-like technology will become part of all devices we use in the future. I wouldn’t say that robots are the future of workplace productivity but they are definitely part of this future. And, as a matter of fact, Sophie is not leading the way from this perspective. RPA (Robotic Process Automation) has been around for over a decade. In the future, AI enabled productivity will become more and more common in the workplace. Sophie is just the start.

What are the direct benefits from employing Sophie? Sophie, unlike human employees, is available 24/7 and delivers consistent quality and is cheaper. But the benefits of implementing Sophie go beyond cost saving. They include higher customer satisfaction, increased customer interaction and sales, help in reaching new customers and gaining a deeper understanding of customers. Do you see Sophie’s capabilities extending beyond customer service in the future?

That is already happening. Even though indeed, the immediate usability is in the customer support area, Sophie can be applied in other areas. An “intelligent” concierge bot could even leverage past requests to provide quick actions such as, “Do you want to book the usual?” Sales teams can take advantage of chatbots because they are ideal What has the employee response for cross-selling. For example, been to Sophie? Have you seen any a mobile operator could initiate resistance? a conversation between an existing customer to offer a broad data It depends a lot of how she package, subscriptions to partner gets introduced and what tasks offerings, or other products that she is expected to support or fit their profile. Alternatively, resolve. Sophie, like any other a chatbot could participate in chatbot/personal assistant, falls the sales process by generating under the family of automation leads for the sales team. Chatbots tools; in this case what is being can trigger conversations to gather automated is the conversation data. With regulations changing with a human. So the employee all the time, chatbots can reach out response to Sophie is somehow to customers to ask for the data similar to the response to other necessary for banks to remain automation tools, ranging from compliant. They can verify data the: “Is she going to steal my for journaling purposes, such as job?” type of reaction to the joy of verifying a customer’s address. being freed from repetitive tasks. Outbound chat conversations are What we have noticed is that particularly powerful because the reactions to Sophie are one they allow companies to reach or two levels more positive than customers on their existing to other automation tools, for the channels. Chats or messages are reason that Sophie is automating also less invasive than a phone call, interaction with users, which tends and require only a few seconds to be more “unpleasant” than plain to complete. Sophie can also be back-office activities. a personal assistant.

Can Sophie’s performance be improved? Well, any technology can always be improved. The same applies for Sophie. Its cognitive capabilities get better automatically when it is being used. We are working on improving using voice as an input channel as it is currently limited to chat conversations only. Sophie could also understand narrative text not just dialog flows. We can improve voice communication, pre-packing certain functionalities and extend the set out-of-the-box of connectors. •

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Technology shorts

Girl power in Bulgaria and Romania E-residency 2.0 is on the way Estonia's e-residency programme has so far contributed more than 14 million euros to the country’s economy. The programme was launched in December 2014 and to date there are nearly 54,000 e-residents representing 162 countries. A quarter of them come from three countries: Finland (10 per cent), Russia (eight per cent) and Ukraine (seven per cent). "While e-Residency 1.0 was an experiment of a kind, it clearly proved that there is a demand for this kind of platform and that it can create remarkable value for e-residents while also being

profitable for Estonia,” Ott Vatter, managing director of e-Residency, said recently in an interview. "E-residency 2.0 will go further and aims to be a true forerunner in terms of digital transformation. We will focus on the quality rather than quantity, working to make e-residents’ business lives as hassle-free as possible whilst also providing them better networking options and giving them more tools to grow their average company value. For Estonia, it means exporting our knowledge, culture and way of life to likeminded people across the globe.”

Bulgaria and Romania have the highest percentage of female students of information and communication technology in the European Union — 33 and 31 per cent respectively. According to Eurostat, the figures refer to students studying at upper secondary level or above. About 1.3 million people were studying Information and communication technologies (ICT) in the European Union in 2016. Girls and women were largely in a minority, accounting for only 17 per cent of all ICT students.

Comment by Keith Hilden, CEO, Relex In the capacity of a FinTech CEO crowdfunding via blockchain and the new digital economy, I have come to Belarus at a time when there is a distinct sea change amongst the authorities both here in Belarus and regionally, creating a ripple effect amongst companies that is having a global impact. President Aleksander Lukashenko’s digital economy decree – issued in 2018 - has unlocked opportunities for us not only as a company, but for the country itself. We have in turn been able to show how far-reaching this decree can be in terms of transformation, allowing Belarus to project its influence abroad by way of establishing itself as a global capital hub for crowdfunding real estate developments,

infrastructure projects, and other public-private partnership works. Case in point, we find distinct interest of our model not only in India, but also in other developed OECD countries, and we are proceeding to act upon this interest. Yet in this case, countries are in the position of asking Belarus for guidance on how to proceed with crowdfunding large investments through the new digital economy. Given the fact that Belarus was a country few could recognise by name, let alone locate on a map, this is a truly transformational event regarding the country’s status in the global pecking order. It truly shows what legislation can do when properly directed and adequately implemented.

Tech — a locomotive for Armenia’s economy Armenia should become a country of high technologies, and its technology sector should become a locomotive for the country’s economy, says Armenian Prime Minister Nikol Pashinyan, adding that the country’s biggest taxpayers should in the next decade come from the tech industry, not monopolist companies and mining conglomerates, as now. Armenia’s government wants to focus on the preparation of highlyqualified specialists. “This is the essence of the economic revolution, which, of course, is connected with education,” he said.

www.electrogrup.ro

Life in Transition

The countries of emerging Europe continue to make giant strides towards achieving the same prosperous living standards of those inÂ Western Europe. Last year, Poland became the first country in the region to be reclassified as a developed market. Challenges remain, however, not least climate change, as aÂ new Iron Curtain of pollution descends upon the continent: the air we breathe in emerging Europe is far more toxic and damaging to health. Will business and governments respond?

LIFE IN TRANSITION

The Big Question Emerging Europe asks some leading thinkers how much the region has changed in the 30 years since the fall of communism, and what challenges still need to be overcome.

T Arup Banerji, Regional Director, European Union, World Bank.

he economic geography of emerging Europe has changed astonishingly fast over the past 30 years. Today, Prague and Bratislava are richer than Île-de-France and Stockholm. Europe’s ‘convergence machine’ has worked. But now it is being challenged by three tectonic shifts. Technological transformation is redefining European value chains—with cheap skilled labour increasingly irrelevant in choosing locations for production. Ageing and internal migration are

destabilising the socio-political and economic balance across generations and geography. And climate change is reshaping opportunities and risks, with agricultural shifts and increased threat of natural disasters. These global trends are, in turn, causing growing divides among Europe’s people. While richer Europeans thrive, poorer Europeans are left behind by the technological revolution, risks from sudden joblessness, old-age insecurity and natural disasters.

For instance, Romanians in Bucharest enjoy similar living standards as those in Antwerp or Helsinki; but those in North-East Romania are among the poorest in Europe. Just half of the poorest European teens are proficient in mathematics, a foundational skill for technological success. Ten years from now, the biggest challenge for Europe’s emerging economies will be how to manage these growing divides, so that every European can share in the continent’s prosperity. •

C Johann Strobl, CEO, Raiffeisen International.

entral and Eastern Europe is our home market. Although the business cycle is past its peak, the overall conditions seem to remain favourable. Thirty years after the fall of the Iron Curtain a lot of progress has been made in CEE, but still there are some challenges ahead. On the one hand, regulatory barriers have to be examined to create a level playing field for all market participants. We also need a more diverse funding base in CEE. This is not the only reason why further support in the development of local capital markets is important. On the other hand, CEE countries are well equipped for digital development and fintechs have been booming over the past years. We are optimistic that the region will continue to develop favorably. •

FOR STARTERS LIFE IN TRANSITION

n a world where talent is fast becoming the key determinant of success, it’s growing to be a scarce resource. Enhancing competitiveness of businesses, institutions and societies has seen a marked transition from an employer-driven environment to an individual-driven one. Complexity growth requires intermingling of multiple skillsets to create modern leadership that is not border-bound. Without a broader vision of social change, new technologies will only serve to reinforce existing institutional

he main challenge for emerging Europe is to switch from investmentbased convergence to innovationled growth. This requires strong economic and political institutions, advanced education and research, and development of deep and resilient financial markets. If this is not achieved, post-communist countries risk becoming a backward periphery of the rich ‘core Europe’ with the latter attracting best human capital from the former; in this scenario, Emerging Europe’s incomes would stagnate resulting in a vicious circle of depopulation, brain drain and slowdown of productivity growth. Can these risks be avoided? Certainly. Already today, several transition countries are on the right track. The main

goals and forms of social inequity. Many prior attempts to mobilise technology in the service of educational reform have failed because interventions have focused narrowly on the deployment of particular media or technologies, without considering broader social, political, or economic conditions. Innovative talent strategies are emerging from all parts of the world, and cities are playing an increasingly signiﬁcant role in these strategies. Such strategies effect all aspects of talent competitiveness, including

education, skilling and re-skilling, attracting external talents and fostering co-creation with local ones, as well as encouraging imported (or returning) talent to stay }and contribute to long-term local objectives. The emergence of new types of employment in the past few decades, including agency work and jobsharing, has helped to create a more diverse labour market. It’s no longer accurate to describe direct, openended, full-time contracts as ‘standard’ and everything else as ‘non-standard’. •

challenge is to strike the right balance between the state and the market. There should be a strong state to protect property rights and competition, and to invest in infrastructure and human capital. But the state should not be

too strong interfering in business decisions. Eventually, innovation should come from the private sector: private entrepreneurs should come up with new ideas and private financiers should select those with best business potential. •

Angelo Lo Vecchio, Head of Eastern Europe, Middle East and North Africa, Adecco Group.

Sergei Guriev, Chief Economist, EBRD.

LIFE IN TRANSITION

Mario Holzner, Executive Director, The Vienna Institute for International Economic Studies (wiiw).

everal long-run challenges are crucial for Central, East and Southeast Europe. Among them are: the transformation of the automotive sector from fossil fuel to electricity based drive technology, the centrifugal forces within the European Union and the massive ageing of societies. If successfully mastered, these challenges can be turned into opportunities for the region over the next decade. In an optimistic scenario, the Central European automotive cluster reinvents itself, the EU can deepen after Brexit and the positive effects of ageing will prevail. Particularly, wages will start to grow more strongly causing a virtuous circle of economic growth driven by robust household demand and strong investment in labour saving technologies. Th is will further improve labour productivity and will give an impetus to the region’s convergence process with Western Europe. •

T Luke Dawson, Managing Director and Head of Capital Markets CEE, Colliers International.

he next decade will be arguably the most pivotal period of development for the countries of emerging Europe. Over the past 30 years we have seen these countries look to defi ne and often redefi ne their own borders, language, culture, economy and politics. The strides taken and lessons learned have been tremendous but there still remains much work to do. Over the next 10 years, they will move from adolescences

to adulthood. These upcoming “teenage” years will be fraught with the search for identity and recognition, the building and breaking of relationships, changes in direction and the need for independence while still needing parental support in times of crisis. Those countries that focus too much on the past without a strategy to forge their own path and independence, run the risk of falling behind without the historical EU safety net in place from earlier times.

It will be the countries that handle this journey with self-awareness, an outward view, and a clear longterm vision that will land in their adulthood with the greatest ease. As we have seen over the past decade, our countries can succeed on the world stage and use their past as the inspiration for innovation, productivity and change not often seen in their more mature neighbouring countries. Here’s to more of that in the decade to come! •

hat will CEE look like in 10 years, what are the challenges and opportunities? First, we look at most CEE countries as having significant needs and a huge potential for an upgrade of their infrastructures. This is valid across many sectors and in all the industries where GE is active, especially Energy, where the region needs more efficient and cost effective power generation with lower emissions. This is also valid for Healthcare, and to a certain extent for Aviation. Second, CEE countries need to improve their ability to attract manufacturing and business with added value. If we look at the World Bank’s Doing Business charts, Emerging Europe is lagging behind in terms of ease and speed to establish a business. There is some progress but room for improvement. In 2000, it took 40 days to establish a business, today it is 10 days on average.

However, it takes just one day in the most business friendly places globally. Removing obstacles for investment is fundamental and this is valid for large companies like GE who have size and resources, but more importantly for SMEs, small and medium-sized enterprises,

that create some 60 per cent of GDP. Emerging Europe’s countries can breed and become the most favourable place for doing business by eliminating red taping and championing transparent and fair business practices in all sectors. •

FOR STARTERS LIFE IN TRANSITION

Michael Keroulle, Chief Commercial Officer, GE Steam Power.

LIFE IN TRANSITION

Quality, not quantity

Sir Suma Chakrabarti

Emerging Europe speaks to Sir Suma Chakrabarti, the president of the European Bank for Reconstruction and Development (EBRD), who tells us that the quality of the bank's investments is just as important as the quantity. WORDS ANDREW WROBEL

ir Suma Chakrabarti has been running the EBRD for almost seven years, during a period of almost unprecedented growth for emerging Europe. As he recognises, however, the region's transition, which began with the fall of the Berlin Wall almost 30 years ago, is far from complete. "There has been tremendous progress across our regions and I am proud that the EBRD has been able to play a part in these important developments," he tells Emerging Europe. "When I look at how 10 of our countries very quickly equipped their economies for entry into the European Union and now continue to benefit from membership, we can see how a dedication to reform can make a real difference. We see this now again in the determination of other countries – in the Western Balkans – to undertake the reforms that are necessary for them to take the same step." There have, of course, been setbacks and many of the EBRD regions suffered particularly during the global economic crisis. Once again though, Sir Suma is proud of the role that the EBRD has played in ensuring that economies have emerged from the crisis stronger than they were ahead of it. "Yes, the EBRD has been able to play a part here, working to make economies more resilient to external shocks, strengthening their capital markets and reducing their dependence on foreign borrowing that proved to be a severe vulnerability at the time of the 2009 downturn. Another cause for celebration is the extent to which many of our economies have embraced the climate agenda, being part of a region with a huge legacy of pollution and energy waste. There is still a lot of work to do. However, there is great demand across all of our regions

for our energy efficiency projects and our rollout of renewable energy plants. Companies and authorities understand much more clearly now that energy efficiency is not just part of a very important social agenda but that is makes good business sense – and that is an achievement in itself." Ongoing problems For many countries in emerging Europe, corruption and a lack of transparency remain key problems, and are just two areas where the EBRD is doing all it can to make adifference. "The EBRD has worked via its projects and its support for policies reform and its establishment of good governance initiatives to address the challenge of corruption," says Sir Suma. "We have seen important progress, for example in the creation of a Business Ombudsman in Ukraine, where companies can receive redress against unfair treatment and which is providing for greater transparency of Ukrainian business practices. Georgia is a post-Soviet country that has made extraordinary progress on the corruption front and shown a marked improvement in rankings, which make it more attractive as an investment destination. There are many other examples of progress. Corruption unfortunately remains a fact of life in our regions and is a significant challenge that still needs to be addressed comprehensively."

for all of the regions where the EBRD works. Countries are taking a stand, increasing energy efficiency and promoting the use of cleaner sources of energy. But this remains a global problem with global implications. Our countries remain extremely vulnerable to changing weather patterns, with all the impact that can have on access to water or on crop production. "Fortunately, there is a virtual universal recognition of this problem and of the need for a concerted response. In addition to its own work, the EBRD is Climate change working together with all its fellow multilateral developments banks. Of the many global risks that But the challenge is immense and might have the biggest impact the time we have to make real on the region in the next year progress is limited." or two, climate change tops One of the ways that the EBRD the EBR D's agenda. is tackling climate change is "Climate change is a clear risk for through its Green Cities initiative, the planet as a whole and obviously a major plank in its overall

FOR STARTERS LIFE IN TRANSITION

climate response. Cities offer an important opportunity to address climate change, as they are major producers of pollution and consumers of energy. "Our work to make cities greener covers virtually all aspects of city life: from making transport systems greener and more energy efficient, from helping to reduce water waste and to create more resilient and efficient heating systems," says Sir Suma. "One project I am particularly proud of is our introduction of green buses in Batumi, Georgia. These buses are reducing local levels of pollution but also they set an example for what can be achieved right across the Caucasus. This was a groundbreaking investment. Just one more example is our introduction of district heating plants fired by wood biomass in Banja Luka in Bosnia and Herzegovina, which reduced

a previous heavy dependence on highly-polluting oil. This again has set the stage for other such investments in our regions."

of the countries where we work to enjoy the fruits of economic progress. The EBRD’s focus on economic inclusion is a response to this challenge, seeking Globalisation gender equality and increasing opportunities on the labour market The EBRD has also for younger people and older people acknowledged the impact of as well as those people who live globalisation. There is no doubt in more remote areas. If we do not that globalisation has pulled address this problem, what is now hundreds of millions of people out an economic challenge will become of poverty. But just as globalisation an even greater social challenge, has produced winners, it has also with all the implications that has for produced losers. political and economic stability." "Inequality and also – just Emerging Europe is currently as importantly – perceptions running a youth survey amongst of inequality have increased. university students from Prosperity has increased right 23 countries in the region. Some across the globe. But many people of the key findings so far are that feel excluded," Sir Suma admits. the biggest challenges in the region "One of our greatest challenges are corruption, anti-democratic is now is to help redress this and tendencies and too slow a pace of help to increase the opportunities economic development. Sir Suma for people right across the societies is well aware that these issues

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matter to young people, and is confident that change is imminent. "Take the pace of of economic development," he says. "We are fi nally seeing real signs of a pickup in virtually all of our countries. But it is crucial that the conditions exist to make sure the profits of growth are shared out fairly. If we do not address this challenge of equality of opportunity there is a danger that people will start to question the development of market economies in democratic societies and to wonder if the sacrifices they have made in support of economic transformation have been worthwhile." Record levels of investment

"At the same time we shall also increase even further the quality of those investments," he says. "A couple of years ago we redefi ned the criteria which guide our investments, unveiling six 'transition qualities' which we feel need to be delivered to best equip the countries in our regions for the challenges of the 21st century. We had always sought to make economies more competitive, but competitiveness alone will not deliver real progress. So we said we would also focus on making economies more resilient, better governed, greener, more integrated and more inclusive. We will indeed aim to invest more in terms of volume. But we can only judge this increased investment a success if we have made a real impact on the lives of the people in the countries we serve and addressing the economic challenges they still face."

In 2019, the EBRD is aiming to make investments worth more than 10 billion euros for the fi rst time in its history, which represents a doubling of its annual investment The Western Balkans levels since the start of the global economic crisis. But as the In 2019, the EBRD plans to bank's president is keen to stress, invest at least 1.1 billion euros investment is not just about quantity. in infrastructure, energy and

the private sector in the Western Balkans. Th is coincides with the bank's Annual Meeting which is held in Sarajevo this year. Th is, Sir Suma believes, represents a real vote of confidence in the region. "The message we are sending is clear: We are a long-standing partner of the region, committed to support the building of an economy that allows its people, especially the young, to deploy their talents and reap the benefits of their efforts in their own country. We need strong growth to fi nance the needs of the countries, but it also needs to be sustainable and inclusive growth to serve its people. Our priorities are the development of the private sector as the engine of growth, jobs and innovation; connectivity as a concept supporting the integration of the region not only in a physical sense (infrastructure), but also through helping to create the conditions for EU approximation; and transition to a green economy by addressing urgent environmental challenges but also reducing the countries’ dependence on external sources of energy." •

Adjara Group Adjara Group is a leading Georgian company in hospitality and lifestyle development. The company entered the Georgian hospitality sector by bringing the first international hotel franchise Holiday InnÂŽ to the local market. It soon gained worldwide recognition for its trend-setting establishments and entrepreneurial projects by founding the independent lifestyle hotel brand Rooms Hotels, which quickly emerged as the premier leader of distinctive hospitality experiences in Tbilisi and Kazbegi. The hip Fabrika, also created by Adjara Group, is a youth-oriented, communal-vibe, design hostel bringing new energy to the capital of Tbilisi. The company is soon opening a local luxury hotel Stamba which has already become an esteemed member of Design Hotels and presents many unique features including an exceptional style casino Aviator

www.adjaragroup.com

LIFE IN TRANSITION

Unsustainable tourism? Some parts of emerging Europe are struggling with the phenomenon of over-tourism. Local, or even national government intervention may be unavoidable if we are to ensure that cultural and natural heritage do not become lost amidst the crowds. WORDS CRAIG TURP

ansko, Bulgaria's largest ski resort, has long held dreams of becoming one of Europe's leading winter sports centres. In January, those dreams were dealt a serious blow when a court in Sofia ruled that expansion of the resort, which is located within the Pirin National Park, was unlawful. Bulgarian environmentalists hailed the ruling as a major victory. “This court decision confirms what W WF and other environmental groups have been insisting all along: that the plans to open up Pirin to ski infrastructure construction and increased logging are illegal. We expect the push to construct in Pirin to continue in the future but in the meantime we will be

working with local communities to ensure they can benefit from one of Europe’s most special places in a sustainable manner,” says Katerina Rakovska, a conservation expert at W WF Bulgaria. The row over Bansko highlights a growing problem for tourism across emerging Europe. Many resorts and even towns and cities are now well over capacity, victims of their own success, combining as they do outstanding value for money with attractions as varied as anywhere in Western Europe. Pressure on ecosystems In Bansko – whose outskirts remain littered with uninhabited or half-completed apartment

complexes – the problem is that lift capacity cannot cope with bed capacity, which leads to long queues for the lifts. “New development puts enormous pressure on the ecosystem, destroys habitats and in the long run deprives Bulgaria of nature that may not be found anywhere else and which local people can rely on to attract a different type of tourist without destroying nature,” Konstantin Ivanov, regional head of campaigns and communications at the W WF’s Danube-Carpathian Programme, tells Emerging Europe. The small town of Kotor in Montenegro was once regarded as one of the Adriatic sea's best kept secrets. Its walled citadel, a UNESCO World Heritage site, is

located on the shores of a dramatic fjord. Over the past 10 years or so the town has become hugely popular with cruise ships. More than 450 now stop in the town's small port each year, embarking as many as 10,000 people per day during the busiest summer periods. The United Nations Development Programme (UNDP) in Montenegro recently developed a web-based carbon calculator which enables tourists to measure the environmental impact of their stay and of transport (land/ sea/air) they use. Eco-sensitive tourists can get informed about the consequences of their actions, which helps them take steps towards reducing their carbon footprint while on holiday. Gimmicks Some observers are concerned that while such initiatives mean well, they are little more than gimmicks that appeal to a traveller's conscience but do not address the real problems. Paul Fahey, a tourism consultant who has advised towns and cities across the world on how to deal with overcrowding believes that for some popular destinations, capping visitor numbers, or even charging visitors, is the only way to achieve a sustainable outcome. "Kotor is merely the latest town on the Adriatic to face this problem," he tells Emerging Europe. "Most recently, Dubrovnik in Croatia made headlines across the world for the damage the sheer number of visitors were causing to the old town. There, the mayor went directly to the cruise ship companies and agreed a deal that would stagger arrivals. He also wants to cap visitor numbers and reduce the number of souvenir shops and restaurants. Such measures have proven to be unpopular with business owners, however. It remains to be seen if he will be brave enough to see his plans through." The opposition is understandable. Tourism accounts for more than 20 per cent of Croatia's total GDP and provides employment – much of it seasonal - for hundreds of thousands of people.

It has contributed enormously to the country's impressive growth for more than two decades. The Venice option "The other option is charging an entrance fee, as Venice has done" says Mr Faher, whose home city of Dublin has long faced overcrowding. Venice council voted in February to introduce a fee of up to 10 euros for all day-trippers. Those who stay at least one night will be exempt from the charge (a similar fee already being included in the price of accommodation). However, rows over implementation (it is not always easy to identify day-trippers) have meant that the charge has yet to be introduced. Elsewhere in emerging Europe, the Czech capital Prague was recently named the fifth most popular European city for tourists, welcoming almost nine million visitors in 2018. It is the only emerging European city to make the global top 50 list of mostvisited cities. It is also, however, one of the smallest, and may have already reached breaking point. “I really do think that Prague has reached critical mass,” Mark Baker, author of the Lonely Planet Guide

to Prague and the Czech Republic tells Emerging Europe. “Most of the other cities on the list are much larger in terms of population or at least have a bigger central area where tourists can congregate. Prague’s old core is comprised of narrow streets pressed into a relatively small area." “The tourist authorities do not appear too concerned about the growing numbers, and they are limited by economic realities: about one in 10 Prague residents now works directly for the tourism industry, so it’s a vital part of the economy,” added Mr Baker. Across emerging Europe tourism has long been viewed in as a panacea for all sorts of ailments, particularly the rejuvenation of former industrial heartlands and rural communities. "Across the region, countries must be careful that the cure does not create more problems than it sets out to solve," warns Mr Fahey. "Those countries in the region whose tourism industry remains relatively small, such as Armenia, Azerbaijan, Belarus, Kosovo and Moldova, should do all they can to ensure that they do not make the same mistakes of the betterknown destinations." •

FOR STARTERS LIFE IN TRANSITION

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From transition to transition: tackling corruption in emerging Europe Corruption remains at the centre of attention when it comes to the transition economies of Central and Eastern Europe. While some countries have become highly affiliated with state-level corruption, others have made considerable achievements. WORDS DOMINIK ISTRATE

s the countries of Central and Eastern European mark the 30-year anniversary of the fall of the Iron Curtain this year, there is growing discontent about which direction certain countries of the region have taken, with corruption remaining one of the top concerns. According to Transparency International’s latest Corruption Perceptions Index, Estonia is by far emerging Europe’s least corrupt country and the 18th least corrupt out of 180 countries worldwide. Poland, Slovenia, the Czech Republic and Lithuania are also seen as notable performers. While Georgia has emerged as the region’s biggest improver, countries like Croatia and Romania have seen falls in their performance, with Hungary registering its lowest score for political rights since the end of communism in 2019. Despite improving their scores, Ukraine and Moldova are still have a long way to go. Azerbaijan is ranked the most corrupt country in the region.

corruption - the legislative and institutional frameworks are in place, although with some gaps,” Transparency International tells Emerging Europe, adding that, however, weak rule of law and state capture remain the biggest obstacles to effective anti-corruption efforts, largely due to lack of true commitment by governments and political elites. “In the Western Balkans, corruption is mostly petty and at the bureaucratic level, with the usual levels of cronyism seen elsewhere. But in the populistafflicted countries of Hungary and Poland, corruption is less within the bureaucracy and more in the realm of the elite, concerned with state capture and the use of the political process to capture rents from the market. So there is a definite demarcation in types of corruption, and the countries of CEE are seen as having made some progress in corruption while the Western Balkans is still fighting the ’man with a uniform’ corruption of the 1990s,” says What can be done? Christopher Hartwell, professor of financial systems resilience In the Western Balkans, Albania, at Bournemouth University. Bosnia and Herzegovina, Kosovo, Looking back on the fight North Macedonia and Serbia all against corruption in postscore poorly with only Montenegro communist countries, former showing slight improvement. Slovak deputy prime minister Over the last few months, tens of Ivan Mikloš argues that the results thousands of people demonstrated are different. “The most important against the government in Belgrade was how quickly and effectively demanding – amongst much particular countries made reforms else – stronger anti-corruption and integrated themselves into measures. With all six Western the European Union,” Mr Mikloš Balkan countries aspiring for EU told Emerging Europe. “When membership, we are entitled to communism collapsed, there was ask: What can these countries an institutional vacuum and in do to enhance the fight against principle, there were two options. corruption? The first one was to intentionally “Western Balkans countries build a new institutional have taken some steps against framework of a functioning

market economy and liberal democracy,” the former deputy PM says, adding that if new postcommunist elites did not emerge and did not implement/execute the first option, then oligarchic and dysfunctional systems were created as seen in Ukraine, Russia and the Western Balkans. He points out that initial systemic challenges could be overcome with the help of the reforms needed for EU integration. However, as the case of Hungary demonstrates, even initial success can prove insufficient. Reducing the space for corruption From the three main methods (punishment, reducing space for corruption, widening access to information), Mr Mikloš believes the latter two are the most effective. “The best ways to reduce space for corruption is to create an open market, liberalisation, deregulation, privatisation, structural reforms, a strong freedom of information act and free media,” he says, noting that in Slovakia, for instance, deep pro-market reforms in 20032004 significantly reduced the space for corruption while a lot of evidence from Ukrainian reforms during the last five years is proving the same. According to Professor Hartwell, shutting down the opportunities for corruption is paramount. “To do that, one must continue to take power away from the state. The most effective way to eliminate corruption is to make sure that there is no opportunity for it in the first place: If you don't need to interact with the public sector, the public sector cannot impose itself on you,” he says, adding that in transition economies,

legal obligations are substantial but the administrative capacity remains weak. Transparency International argues that the Western Balkans countries themselves have promising ideas. “Initiatives like the independent vetting of judges and prosecutors in Albania have raised hopes, but lack of transparency raises concerns,” TI told me, adding that the process is moving forward at a rather slow pace. “More recently, we see steps being taken in the right direction in North Macedonia where members of the State Commission for the Prevention of Corruption are elected according to legally prescribed criteria, in a very transparent procedure with the participation of civil society and the media.” According to the anti-corruption watchdog, best practices that can serve as examples for this region include mechanisms ensuring contracting and political campaign finance, such as those in Slovakia and the Czech Republic where government contracts have to be published online before they become valid, and political parties must have open bank accounts for all types of elections where all donations and expenditures are made public. “Publicly available registries of beneficial ownership such as the one in Slovakia can also be replicated as a way to address conflict of interest,” TI comments. Perhaps the most remarkable developments have been in Romania, where the National Anticorruption Directorate (DNA), under the leadership of Laura CodruțaKövesi, 37 leading Romanian politicians were convicted of corruption from 2013-18. Alas, Ms Codruța-Kövesi was dismissed by the Romanian justice minister in 2018, and the DNA’s work has since been hampered by highly controversial changes to the country’s penal code. For the eleven EU member states of emerging Europe, the European bloc offers another solution. From 2020, a newly-created European Public Prosecutor’s Office will investigate fraudulent activities related to EU funds, with

FOR STARTERS LIFE IN TRANSITION

Ms Codruța-Kövesi set to become its top prosecutor. So far, only the Polish and Hungarian governments have rejected membership of the Prosecutor’s Office. However, a petition in Hungary calling on the government to join

the institution has collected more than 500,000 signatures over the last couple of months, showing that amongst the general public at least there is a clear desire to punish corrupt officials and oligarchs who abuse EU funds. The government should take note. •

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EBRD: Country Reports Central and Southeastern Europe

Charlotte Ruhe, Managing Director, Central and Southeastern Europe, EBRD.

This year marks 30 years since the fall of the Iron Curtain. The former communist countries in Central, Eastern and Southeastern Europe have made massive progress towards prosperous, private-sector based economies. Yet this process has been uneven, especially when it comes to convergence where some regions are today equalling western European levels while others still have quite a distance to go. In many cases the successful economic transformation was based on attracting foreign direct investment and the inflow of bank funding. Today the challenge is to remain attractive for local and international investors as the economies move towards the new frontier. We see enormous potential, for instance in IT and specialised high-tech, but to be economically viable the often

Serbia

Zsuzsanna Hargitai, Director, Western Balkans, EBRD.

Electronic and automotive industries, digital services as well as agribusiness - in its whole value chain - continue to present excellent opportunities for investment. We expect that doors will soon be open for a new wave of renewable energy investments, while promising innovative companies are springing up in new technoparks and looking for financial investors. Intermodal logistic terminals would benefit

small local markets must do more in terms of regional integration. Interestingly, we see most of this promising dynamics on the periphery – in the Baltics in the north and the Balkans in the south. Central Europe, meanwhile, has become part

from Serbia’s geographical location and increasing demand from private corporates for high standard logistic services. Two main challenges the country will need to work on further remain: one relates to ensuring the consistent application of laws and regulations and the creation of a level playing field for all companies. The other is education reform to ensure that young people acquire skills that meet the demand and requirements of companies of the real economy. •

of the EU Single Market. The EBRD remains the countries’ strong supporter as they take on the opportunities and challenges this brings along as demonstrated by the circa 2.5 billion euros we invested in the region last year alone. •

LIFE IN TRANSITION

Belarus For a long time, when international investors thought of Belarus, they imagined opportunities in the country’s traditional sectors where the country has a strong comparative advantage. These include wood-processing, agribusiness, machine-building, textiles and transport. Indeed, significant opportunities in those sectors remain even today and the EBRD has recently been able to support a number of investments with international and local companies. However, the most exciting investment opportunities in Belarus today are in new sectors where the government has been establishing a particularly conducive policy environment. IT is perhaps the most rapidly developing success story today. Over the past decade, it grew from modest size to contributing around five per cent of GDP today and one fifth of all service exports. Much of the growth took place in the country’s thriving Hi-Tech

Central Asia The EBRD’s strategic objectives in Central Asia are private sector development, including small businesses, diversification of local economies and promotion of green energy generation. Central Asia offers vast potential, but a lot remains to be done: From access

Park which has an attractive tax, immigration and legal regime. The growth potential is far from exhausted as the country’s education system with support of IT companies has continued to increase the population of IT experts by 5-10 per cent every year. Belarus’ greatest economic challenge is to ensure that the country’s large and diversified network of public enterprises and financial institutions, many of them modernised during the recent decade, become more productive, including by establishing effective

to finance in order to foster private entrepreneurship to massive infrastructure investment which will enable the region to regain its traditional position as a bridge between East and West. Uzbekistan has engaged in a very deep and ambitious reform process. With its agricultural, industrial and mineral legacy, Uzbekistan

partnerships with quality international investors. The EBRD has been working closely with the government to help improve governance and commercial approaches by several banks and companies. These efforts have found a strong response to bring these companies to the best international standards. Therefore, our outlook for Belarus is positive and we expect to set some strong examples in terms of stabilising global partnerships for some state companies in the coming months. •

is likely to attract serious interest from foreign investors including in privatisations and greenfield. Uzbekistan is opening up, and is offering a new and large market to its neighbour countries, with whom it has opened up borders that had been closed for many years. Kazakhstan is going through a change in leadership through a process that has received support from the market and investors. A new breath of opportunities will come from a new generation taking over the significant transition already achieved and given momentum on its economic transformation With its presence on the ground and with the major countries as shareholders the EBRD regards itself as an important player in the region, combining investment with engagement in policy reforms and offering its vast experience to local and international investors. •

Alex Pivovarsky, Head of Belarus Representative Office, EBRD.

Bruno Balvanera, Managing Director, Central Asia, EBRD.

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Miha Polak, Acting Head of Slovenia, EBRD.

Slovenia The Slovenian market requires EBRD to engage in areas where it remains important, such as equity fi nancing, capital market instruments, cross-border investments and green economy technologies. These are broadly areas where we see the main opportunities, with focus primarily on the manufacturing and services segment but also on fi nancial institutions given the ongoing consolidation in the banking sector. Also, the Slovenian private sector is vibrant with a lot of so-called “hidden champions”. These are successful SMEs serving niche markets or operating in the B2B segment. They rather stay invisible to a wider public and they are the type of innovative businesses the expansion of which the bank aims to support. As per challenges, the main problem is the slow pace of

privatisation and the role of the state. Slovenia did not undergo a comprehensive privatisation process during the 1990s. As a consequence, state involvement in the economy is still high and the profitability of Slovenian SOEs is low. But an even bigger problem is the (frequent) cross-ownership of companies, meaning that one

Jacek Kubas, Associate Director, Local Currency and Capital Markets Development, EBRD.

Poland and the Baltics Currently the Polish capital market is much less developed than most European markets. To address this issue, EBRD - in cooperation with the European Union SRSS - is advising the ministry of finance in developing a Capital Market Development Strategy (CMDS). The goal of the CMDS is to "identify necessary institutional and regulatory changes (including changes introduced by the European Commission within the frame of the Capital Markets Union), resulting in a growth of

the importance of equity and debt financing in the Polish economy”. The Capital Markets Development Strategy is a government deliverable arising from the Polish Responsible Development Strategy. It is the fi rst fi ve-year plan in a series of fi ve-year capital market development strategies that will be created to facilitate economic growth and promote Poland’s long-term development. The CMDS is the fi rst detailed national capital markets plan for Poland that builds on Poland’s classification as a developed market. It covers the period 2019-

entity owns another and vice-versa. While the interconnectedness of state-owned banks with poorly performing SOEs had contributed to the excessive debt build-up before the crisis, cross-ownership also adds to governance problems and provides insufficient incentives to improve productivity. •

2023. The ministry of fi nance, EBRD and EU SRSS are motivated to ensure the benefits will be dynamic, promoting the Polish capital markets to a new level of development and allowing them to be more competitive. Together with the relevant authorities, the EBRD has also come up with the idea of developing a joint bond and capital market for the entire Baltic region. Th is has essentially kick-started the idea of a pan-Baltic capital market. In November 2017, a Memorandum of Understanding was signed in Brussels by all the Baltic ministries. The purpose was simple: to create a panBaltic capital market in order to strengthen the respective economies and stimulate investment to create jobs – all in line with the European Commission’s Capital Market Union (or CMU) Action Plan and the EBRD’s priorities in the region. Th is resulted in an increased push for the reforms in relation to capital market, including creation and implementation of the framework for Pan-Baltic Covered Bonds. As a result, over the last two years we have seen an increased number of capital market transactions across the Baltics. •

2020 ANNUAL MEETING 13â&#x20AC;&#x201C;14 May 2020 For information and regular updates: www.ebrd.com/am

Outlook on Kosovo

More than a decade since independence, Europe's youngest country retains enormous potential. As democratic institutions and the rule of law slowly mature, investors are becoming increasingly convinced that the country is a safe place in which to do business. But will investment arrive quickly enough to create the wellpaying jobs that Kosovo's young population craves?

OUTLOOK ON KOSOVO

Investing in Kosovo Emerging Europe sits down with Neil Taylor, head of Kosovo at the European Bank for Reconstruction and Development (EBRD), to discuss both the opportunities and challenges facing the young country. WORDS ANDREW WROBEL

s country boss of one of the leading institutional investors in Kosovo, few people are in a better position to offer a thorough perspective of the country’s investment climate than the EBRD’s Neil Taylor. One of the first pieces of insight he offers is that as a young country, Kosovo has exceptional opportunities that many other countries in Europe do not have, but that challenges remain. “After independence, Kosovo was able to establish a new legal and regulatory system, modelling it on modern best practices,” he says. “To achieve the best results, Kosovo must continue to focus on consistent and timely implementation of legislation and strengthen the capacities of the judiciary and rule of law. The economy remains constrained

by low productivity, high unemployment, a thin export base and limited foreign direct investment (around three per cent of GDP annually over the past five years). Businesses lack the know-how and capacity to expand, improve productivity and innovate. These challenges need to be addressed in order for the country to reach its full potential.” While a young and growing population provides an ample supply of labour in contrast to most European countries, enhancing the quality of education and training is key to reducing skills mismatches. “This is an issue which is often reported by companies,” says Mr Taylor. “Also, improving the quality of life and the business

environment is necessary in order to reduce still high emigration and keep talented people at home. Kosovo’s economy is growing faster than its peers in the region but it needs to accelerate even more. The young generation of Kosovars represents perhaps a unique opportunity to achieve this.” Mr Taylor also feels that improving the political relationship with Serbia would help to enhance the economy. “It would send the right signal to foreign investors. This would undoubtedly contribute to faster growth,” he adds. In 2018, Kosovo’s economy grew by 4.1 per cent. The EBRD sees this as sustainable. “I think that we can expect Kosovo to sustain a growth rate of around four per cent in the medium term, or indeed even increase it if the business environment improves further.” The energy question The challenges that the EBRD wants to tackle in Kosovo are similar to those of the wider region: fostering the private sector’s potential, strengthening regional integration and connectivity, and addressing the energy challenge. “We are well aware that energy is a crucial question in the Western Balkans where the majority of energy generation depends on coal and efficiency standards throughout the value chain leave considerable room for improvement,” says Mr Taylor. “This issue is probably nowhere more acute than in Kosovo. We are determined to make a strong contribution to help the country address this challenge and find sustainable solutions. Our focus is on energy diversification through renewable energy production, improving power transmission

and supporting energy efficiency improvements. We are working closely with the authorities to finalise the regulatory framework in a form that will unlock significant investment in clean, domestic power. We are also working to improve residential energy efficiency by extending a number of credit lines and in 2018 we signed Prishtina up to our Green Cities programme.” To promote the private sector, the EBRD is expanding its private sector finance and advice: “In 2018 we launched our new SME Competitiveness credit lines with two banks and made deals with three corporate and SME clients. This goes hand in hand with work to develop the sector sustainably through policy discussions on the investment climate and governance, and with advisory services to accelerate the growth of small businesses. More remains to be done on privatisation and we have offered to support the government’s intentions in this regard, starting with Kosovo Telecom.” The EBRD also recognises that supporting connectivity, regional integration and infrastructure development is needed to improve Kosovo’s main transport links, strengthening cooperation with the region and beyond, and helping to attract foreign direct investment. “Kosovo needs to build the main roads to Pan-European corridors, and update its railway network,” says Mr Taylor. “We have financed some transport projects but implementation needs to speed up. Municipal infrastructure is an additional area that offers significant investment opportunities. Last year we signed an MoU with the government on this and we plan to sign the first project under this envelope, the Gjilan wastewater treatment plant, very soon.” The EBRD intends to be a lonterm partner for Kosovo in each of these sectors and its goal is to crowd-in other investors where we can. “Last year we financed 52 million euros of projects in Kosovo, of which around three quarters in the private sector. Over the coming few years, and

given the right conditions, we are aiming to increase our investment up towards 100 million euros a year.” The euro While not part of the eurozone, Kosovo makes use of the euro. Mr Taylor believes this brings both advantages and disadvantages. “On the positive side, use of the euro eliminates the risk of speculative attacks and exchange rate risks for businesses, allowing lower transaction costs. Interest rates can also be lower. On the other hand, there is no monetary policy independence, thus restricting options to respond to economic shocks. Benefits from using the euro can increase as Kosovo becomes more integrated with the European Union/eurozone and the institutional and business environment improves further.” Mr Taylor sees three preconditions as being necessary for developing an entrepreneurial and innovative culture. “Creating a legal and institutional environment in line with the EU approximation process, which is the region’s stated goal, is one. Progress here is essential also in order to mobilise investment. Investors need the protection of a well-functioning system based on the rule of law. “A second important step is regional integration: building mutually supportive relationships with neighbours. Here, developments like the establishment of transnational business registries or the creation of a regional investment platform can be a step in the right direction and we are supporting Kosovo’s involvement. “Third, Kosovo needs to overcome physical barriers such as the opening of border crossings and also eliminating tariff and non-tariff barriers to trade as all countries in the Western Balkans hugely benefit from more trade. They also gain a lot from, more than anything, the creation of an infrastructure that links the countries with each other and with the wider neighbourhood. Hard connectivity also includes addressing the energy needs of an economy fit for the 21st century,

from generation through distribution to consumption. And speaking of the 21st century: Infrastructure today must include the components for a digital economy from fast internet to modern broadband.” Positive examples In terms of innovation, Mr Taylor highlights Kivo, a plastic recycling company, that the EBRD financed last year. The local entrepreneur partnered with an established Dutch business, learned best practice and technologies from them, and together they successfully launched a recycling plant in Kosovo. “This is a great example of taking innovation from abroad and we encourage more of Kosovo’s talented entrepreneurs to create these kinds of links in order to accelerate their business growth,” he says. “Another good example of fostering innovation is the Innovation Centre Kosovo (ICK), which has been our partner for a few years now. The ICK has provided an initial home for new exciting companies such as J-coders, who provide training to young would-be programmers, and Zombie Soup, an ICT solutions provider that exports services to the US and EU. In fact, J-coders’ new initiative, Lab box, recently secured funding through ENIF, the enterprise innovation fund that we set up with other IFIs and the EU to stimulate entrepreneurship in the region. Creating an ecosystem for start-ups in high potential sectors such as ICT, where Kosovo has a comparative advantage, is critical to create the next generation of local companies that can contribute to longer term growth.” In sum, the EBRD wants to put in place an environment in which the private sector can flourish – by improving governance, and transport, and by providing businesses with access to finance and advice, among other things - is where governments and international organisations can help. “We’ll know it has succeeded when the market takes over and it all starts happening by itself,” concludes Mr Taylor. •

OUTLOOK ON KOSOVO

Banking on Kosovo Raiffeisen has been operating in Kosovo since 2003. Emerging Europe speaks to the bank's CEO, Robert Wright, about the country's potential across a number of sectors, as well as the growth of retail banking. WORDS ANDREW WROBEL

Robert Wright

osovo's conflict with Serbia, which reached its violent peak during 1998 and early 1999, destroyed much of the country's economy, and nearly 20 years on the Kosovo economy still relies heavily on diaspora remittances which consistently total over 700 million euros per annum. However, Robert Wright, the CEO of Raiffeisen Bank Kosovo, sees things finally beginning to move forward. "In the years since 2003, various investors in financial services, telecoms, mining and energy have entered the market, and coupled with the substantial government investment in road infrastructure,

this has helped the country to achieve some important milestones in its economic development," he says. Kosovo still has a very large net export gap, and consumption is mainly based on the trade of imported goods and services, but even this is changing. "In recent years we have actually witnessed Kosovo becoming a net exporter of services. We also see a significant growth of investments in areas such as IT and agriculture," he says. "Banks have also been more willing to support the development of the economy with an increasingly diverse loan portfolio by providing credit to successful entrepreneurs and in turn creating jobs and an overall improvement of the wellbeing of the citizens of Kosovo."

to use euros as a means of payment, rather than using euros as a safehaven, and therefore consumption confidence in Kosovo was not harmed. In fact it was the contrary and the deposits and remittances in Kosovo continued to increase. Privatisation of large parts of the economy and new entrants into the market continued even after 2009 and this was also a positive development for euro investments. "Secondly, during the economic crisis, small currencies usually suffer in price compared to hard currencies, but we did not see any depletion in the purchase power parity of Kosovo citizens at that time. The number of Kosovo households has increased by around 20,000 each year since 2009, and Kosovo credit growth has consistently been in double digit percentage rates, supported The role of the euro by very low NPL’s and very high NPL coverage rates. Even though Kosovo is not "Thirdly, euro currency part of the eurozone, it does use investments in Kosovo are the euro. Mr Wright views this as considered capital friendly since an advantage. the euro itself provides a shield to "Kosovo has stable economic the loss of value for investors who are output growth of above 3.5 per cent holding their investment in the form on average which shows that of capital in euros in Kosovo. On the the euro is not an impediment other hand, capital investment to economic growth rather holders in countries denominated an important enabler to local in weak local currencies suffered and foreign investors," he tells important losses in value in euro Emerging Europe. "In years of terms in the aftermath of financial turmoil such as 2008the currency crisis. We have seen 2009 the euro currency shielded currencies like the forint, dinar the Kosovo economy in three and rouble depreciate significantly important ways. in recent years." "First, Kosovo has a large Kosovo still faces many diaspora that saves in Kosovo challenges. Mr Wright views and thanks to the fact that we the large trade deficit, weak did not face the risk of currency contract enforcement, low depreciation, since we do not have labour participation, high a local currency, lots of savers unemployment, disrespect for and investors did not find it risky the rule of law, and matters to maintain funds and capital in concerning the governmental euros in Kosovo and pull deposits sector as all being issues that and investments out of Kosovo. need attention. Improvement Even during the difficult times of in air quality, and creating the 2008 crisis Kosovars continued incentives for a comprehensive

investment framework for FDI are two other challenges that need to be addressed in order to put the Kosovo proposition onto the investor map. Growth potential Mr Wright identifies four sectors – agriculture, energy, IT and tourism – as having excellent potential. "In agriculture, Kosovo needs to increase the amount of arable land as proportionately, compared to the region, it is small. In Kosovo even wheat and vegetables are goods with a net import balance, but with the right strategy the country has the potential to flip the equation and be self-sufficient in many aspects of the food and beverages industry. "Kosovo has a lot of potential in renewable energy and serious investments are currently occurring in wind energy. With an average population age of only 28, many young Kosovars are savvy in foreign languages, something which is driving investment in IT. "Another area where Kosovo has potential is mountain tourism. Kosovo has two ski resorts but hotel capacity is lacking in peak season, and the infrastructure itself needs significant renewal and transformation to reach an acceptable standard for potential regional, European or Asian tourists. "In summary, Kosovo has a bright future ahead with significant untapped potential in many areas, and with the support of regional and international investors, important and very positive changes can be made for the benefit of the economy and society in general." Kosovo's banking sector has developed dramatically in recent years, and currently boasts some numbers which while relatively small are impressive in their growth. Loans outstanding at the end of 2018 for example totalled 2.7 billion euros compared to 1.4 billion euros in 2010, a 93 per cent increase. Interest rates on loans have also decreased dramatically from an average 14 per cent in 2010 to six per cent in 2018. Meantime, deposits grew by 73 per cent in the same period to a total of 3.36 billion euros in 2018.

"In addition to excellent growth, the Kosovo banking sector consistently delivers impressive KPIs with a Cost Income Ratio around 50 per cent in 2018, NPLs three per cent and profit of around 87 million euros," says Mr Wright.

and will lend up to 95 per cent of the property value, "it is other issues on the demand side that limit the market such as property prices, reliability of title and low public sector salaries which severely limit the amount a potential home owner can borrow." Retail banking Raiffeisen is the largest bank in Kosovo with a market share As a young country, Kosovo is of around 22 per cent of loans playing catch-up with the rest of and deposits. It also has the most Europe and banking is no exception. branches (46) and ATMs (115). Mr Wright views this as a positive However, Mr Wright is keen to for the banking industry, however. point out that market share is not "The young population want to a key target: "We gain market share do their banking via non-branch as a consequence of delivering channels and this has driven on other key targets such as the the relatively fast development of quality of our customer service, alternatives such as mobile and the relevance of our products and e-banking. Kosovars are very aware services and the footprint of our of banking products, although distribution network," he says." awareness is one thing, usage is another. Money transmission on Private sector finance remote channels is relatively good by regional standards but credit While the private sector has card usage is low and consumer certainly moved forward in the 11 loans and mortgages still have years since Kosovo independence, significant growth potential. it still has some way to go to be on a This opens up the on-going and par with its regional neighbours. passionate debate about access to "The saturation and finance. Why is it relatively low and concentration of industries can be how do we fix it?" a problem where competitors simply As such, Raiffeisen's CEO sees have price driven propositions in lots of potential for growth in retail over-supplied markets with no clear banking. There is still a significant sustainable competitive advantage. percentage of the individual Construction, petrol retailers, and population outside of the banking supermarkets are good examples of system or only partially engaged this," says Mr Wright. with banks: just 52 per cent of "The banking market is often Kosovo adults have a bank account. accused of not providing access to The rates in neighboring countries funding but I can assure you we are such as Serbia (71 per cent) and all keen to expand and diversify North Macedonia (77 per cent) our loan portfolios. Ten banks are much higher. "There is also and 12 MFIs are competing in room for significant growth with a relatively small market and we existing customers," he says, "and need to maximise its full potential. all regional comparisons show that However, our ability to improve Kosovo lags behind on product access to funding is often limited ownership and usage." due to a number of factors, One specific area which including a lack of transparency Mr Wright feels is dramatically from potential business clients – under-developed is the residential for example no audited accounts mortgage market. The total and obvious tax evasion, late loan portfolio in Kosovo is entrants into saturated markets, around 100 million euros no equity investment, no clear compared to 600 million euros sustainable business plans with in North Macedonia which value-creating competitive has similar size population. advantages and salary payments Montenegro, with a population made in cash which limit the of just 600,000, has a mortgage borrowing ability of employees," portfolio of 1.5 billion euros. concludes Mr Wright. • Wright believes that while Kosovo banks love to issue mortgages

OUTLOOK ON KOSOVO

War and peace

o all intents and purposes, Kosovo's modern borders were defined in 1945 when it became an autonomous entity within the People's Republic of Serbia. Under the 1974 Yugoslav constitution (which, as anyone who has studied it will know, is one of the most insanely complicated constitutions ever written), Kosovo obtained more extensive autonomy, but was not granted the status of constituent republic alongside the other republics of Yugoslavia. Protests by ethnic Albanians in 1981 over the status of Kosovo resulted in Yugoslav territorial defence units being brought into Kosovo and a state of emergency being declared. The protests were violently put down.

In July 1990, the Kosovo Albanians proclaimed the existence of the Republic of Kosova, and declared it a sovereign and independent state in September 1992. Only Albania recognised the new country, however. The Dayton Agreement which brought an end to the war in Bosnia in 1995 ignored the status of Kosovo. Ibrahim Rugova, who had served as the president of independent Kosovo and who had called for non-violent resistance against Serb forces was usurped by the Kosovo LiberationArmy, which began a guerrilla campaign against the Yugoslav army and Serb police. Fighting intensified throughout 1998, with thousands of deaths. Massacres of civilians and ethnic cleansing were carried out by both sides. A number of internationalbrokered ceasefires failed to hold. NATO finally intervened early in 1999, but the initial impact was the mass expulsion of Kosovo Albanians by Yugoslav forces. Fearing new massacres and Economic decline throughout the 1980s, which forced many ethnic ethnic cleansing, NATO carried out a bombing campaign against Serbs to leave the province, as well Serbia from March to June 1999. as a far higher birth rate amongst Albanians, meant that by the end of As the then UK prime minister the decade Albanians accounted for Tony Blair put it at the time: "Fail around 90 per cent of the province's to act now, and we would have to deal with the consequences of population. At the beginning of spiralling conflict and hundreds of the decade it had been 75 per cent. In July 1989, Kosovo's autonomy thousands of refugees." The conf lict was brought to an was largely revoked by then Serb end by the signing of a treaty in president Slobodan Milošević Kumanovo, Macedonia, under and Kosovo returned to its prethe terms of which Yugoslav 1974 status. Kosovo Albanians and Serb forces – weakened by responded with a non-violent the NATO campaign - agreed separatist movement, employing to withdraw from Kosovo. widespread civil disobedience and International peacekeepers, the creation of parallel structures known as KFOR, replaced them, in education, medical care, and and the province was placed under taxation, with the ultimate goal of direct UN control. achieving full independence.

Independence UN-backed talks to resolve the long-term future of Kosovo began in February 2006, led by UN Special Envoy Martti Ahtisaari, a former Finnish president, and although they reached no formal agreement, Kosovo subsequently declared independence from Serbia on February 17, 2008. The new country was immediately recognised by the United States and most European Union member states. Today, more than 100 countries recognise Kosovo as an independent country, including all of its neighbours with the exception of Serbia. It has become a member of a number of international organisations, but not the United Nations, where Russia, a Serb ally, has a veto. Today, Kosovo is a multi-party parliamentary democracy, with an elected president as head of state. Since 2016 this has been Hashim Thaçi, a former key leader of the KLA. The government is led by prime minister Ramush Haradinaj, also a former KLA commander. Mr Haradinaj has twice been acquitted of war crimes by the Hague Tribunal. The relationship between the two has long been fraught, and according to a recent report in the Kosovan newspaper Koha Ditore the pair have not met at all in 2019. Much of the antagonism stems from the differing stance the pair have over ongoing negotiations with Serbia. Mr Thaçi has recently been the more willing to compromise, and openly supports a solution that would see Serbia and Kosovo swap territory, with three predominantly ethnic Albanian municipalities in Serbia’s Presevo valley becoming part of Kosovo, and part of north Kosovo – where the majority of Kosovo’s ethnic Serbs live – being offered to Serbia in exchange. Mr Haradinaj opposes the plan, as does the European Union, which fears such a deal could reopen old border disputes elsewhere in the Western Balkans. Without explicitly saying so, Serbia, the US and Russia appear to be broadly in favour. Furthermore, Mr Haradinaj has felt marginalised by Mr Thaçi taking the leading role in negotiations.

OUTLOOK ON KOSOVO

have continued, but little progress has been made. After their last meeting, in Vienna in February, Mr Vučić claimed that negotiations had reached a "stalemate". Mr Thaçi appeared to agree. "We are now in a state of a frozen conflict, which, I believe, means a regression – we need a compromise that would provide mutual recognition and enable Kosovo’s UN membership,” he said, also suggesting that the customs tariffs might be lifted if Serbia discontinued its practice of vetoing Kosovo's membership of Interpol. Mr Thaçi did, however, leave the door open to compromise. “There is still hope, because there is a willingness to sit down and talk – we do have differences in our opinions but we are still willing to discuss them,” he said. “I know that recognition won’t be a present from Serbia, it has to be a compromise. The EU and US must be as united as possible in their support, and there is even a chance that Russia will accept the compromise. Leaders in the region also support our Stalemate agreement. We can maintain this frozen relationship, but it will In November 2018, Kosovo's have a negative impact for the government introduced high entire region.” customs tariffs on all goods It is likely that both sides are entering the country from Serbia now waiting for the installation of and Bosnia and Herzegovina. The EU has said that the tariffs defy a new European Commission later this year to provide fresh ideas and the basic principles of trade within impetus to negotiations. What's the Central European Free Trade Agreement (CEFTA) and has called clear is that a continued stalemate suits neither side. While history on Kosovo to remove them. has divided the two countries and Since then, negotiations communities, their future relies on between Mr Thaçi and his Serbian them being able to work together. • counterpart Aleksandar Vučić Last year, the EU was forced to issue a statement in which it said that Mr Thaçi was the only Kosovan representative it would recognise. The EU has long made it clear that neither Serbia nor Kosovo will be allowed to become a member state unless an agreement is reached. In its latest Western Balkans strategy, published in February 2018, the EU stated that only "the comprehensive normalisation of relations" could allow both countries to continue along their European path. Kosovan reaction to the strategy was lukewarm. “Kosovo, as an integral part of the mosaic making up the Western Balkans, needs to be treated as an equal with the other five partners in the region, in the European Union’s plans to enlarge in this non-EU pocket of Europe,” says Bekim Collaku, chief of staff to the president of Kosovo and a former minister for EU Integration.

OUTLOOK ON KOSOVO

Manufacturing in Kosovo Kosovo’s industrial sector, like much of the economy, was weakened by the war for independence and is now playing catchup with the rest of the region. There are some positive signs however that the speed of progress is about to quicken. WORDS DOMINIK ISTRATE

ike many other transition economies, Kosovo has been showing continuous and remarkable growth over the past few years – growing by at least four per cent annually since 2015 with a similar outlook for 2019. While the economy is dominated by services, agricultural businesses and industrial activities also make considerable contributions. With a population of less than two million, a privatisation process that started late in 2003 and “only” around 21,000 registered businesses, the country provides several opportunities for those planning on doing business.

Sectors to watch As suggested by the Kosovo Investment and Enterprise Support Agency, key sectors within the manufacturing industry prime for investment include textile and leather processing, wood processing, as well as food processing and packaging. With a population out of which 60 per cent works in agriculture and a surface of arable land at 53 per cent, the Kosovan food industry stands out. With a strong tradition of producing dairy products, fruits, vegetables, meat, wine and other beverages,

Kosovo’s agriculture contributes 13 per cent to the country’s GDP and accounts for 18 per cent of exports. Altogether, with more than 800 businesses, the food and beverages sector has started to penetrate EU markets as well as expanding in the domestic economy. Interestingly, more than two-thirds of businesses produce biscuits, bread, cereals and wheat while only 35 per cent of them are micro-, small- or mediumsized enterprises. Among others, businesses within the sector face high electricity costs, high taxes, poor access to loans and problems in local infrastructure.

Once the second most important sector of the Kosovan economy after mining, the textile industry has seen a drastic loss in markets and faces numerous challenges in competitiveness with other companies from the Balkan region due to the fact that many of these businesses were established by employees of Yugoslav-era state companies. Since 2012, the Kosovan government has made several efforts to consolidate the industry by prioritising creating jobs and attracting foreign investors. Currently, textile companies amount to 182 active businesses, more than 86 per cent of which are either medium or large enterprises such as Jatex, Unikat, Remateks, Semtex and KosovaTex. Around 54 per cent of these enterprises deal with the production of garments, more than one-third of them manufacture textiles, followed by companies preparing leather products that have a 10 per cent share in the market. While the industry has experienced a significant recovery compared to the 1990s, competition from the informal sector, low purchasing power in the domestic market, access to finance, high taxes and the cost of raw materials all pose a challenge for businesses, especially small and microenterprises that produce solely for the Kosovan market. Still, the sector offers three major benefits for investments: cheap and well-trained labour, a solid technological background, as well as sub-contracting and outsourcing possibilities. Building on a forest area of more than 465,000 hectares, wood processing is considered one of the strategic sectors in the country, with a total standing volume of 53 million cubic metres. Out of the close to 1,500 companies operating in the sector, recent data shows that 75 per cent of them manufacture final products – the remaining 18 per cent prepare semi-final products while 10 per cent produce raw materials. Kosovo’s investment promotion agency reports that most of the wood processing companies can look positively to the future after achieving positive results in terms of turnover, value-added

production, as well as growth in employment and exports. Products such as kitchen cabinets, chairs, tables, home and office furniture amount to 40 per cent of the wood industry’s production while another 40 per cent builder’s carpentry and joinery, with the remaining 20 per cent specialising in sawmilling, planing, impregnation or other manufacturing activities. Companies producing wood furniture and home interior products have made significant gains in exports, having increased by 22 per cent from 23 million euros in 2017 to 28 million euros in 2018. Politics over trade According to the Kosovo Manufacturing Club, an NGO incorporating the largest manufacturers with 30 factories, more than 100 brands and 15,000 employees, the country’s economy is facing considerable pressure from Serbia. At the end of 2018, Kosovo’s government raised

tariffs from 10 to 100 per cent on all products imported from Serbia for which the latter reacted with same countermeasures. Although the dispute between Serbia and Kosovo originates from a political and not trade-related motive, it will have mostly economic consequences. The decision taken by Kosovo’s government was a retaliation against Serbia blocking the country’s bid to join Interpol. It has been heavily criticised by both the Kosovan public and on an international scale, with the EU and the US both calling for an end to the de-facto trade war. While Serbia has a track record of making business highly difficult for exporters from Kosovo – such as blocking goods arriving at the border or enforcing non-tariff barriers to Kosovo exporters – the move of Kosovo’s government is sure to hit local businesses which have already submitted a request to exempt Serbia-based international enterprises from the tariff as they supply Kosovan manufacturers with raw materials. •

OUTLOOK ON KOSOVO

ccess to the internet has grown in Kosovo over the last few years, and a majority of households now have an internet connection. However, 38.7 per cent of the country’s population still has no access to any type of electronic computer device. According to the Kosovo Association of Information and Communication Technology’s (STIKK) IT Barometer report for 2018, the ICT sector is currently considered as one of the few sectors with a positive trade balance. More than 78 per cent of IT companies in Kosovo now export their services and products, a huge increase compared to 2017 when only 58 per cent of IT companies exported their services. “This year’s [2018] IT Barometer results reveal positive trends in terms of revenues and salaries in the IT industry. Monthly salaries for IT professionals have also seen steady growth over the last two year. Salaries for IT professions have gone up by four per cent. The largest rise in salaries are for business development managers (nine per cent), developers and administrators (eight per cent each),” the report explains. Challenges While the development of the ICT sector in Kosovo has become one of the government’s top priorities over the last five years, challenges remain. This is further highlighted by the results of a survey carried out by PwC. The results show that a large number of respondents are unsatisfied with the current policy and regulatory environment and developments (43 per cent), and also feel that the quality of schools and training for people working in the digital tech sector is inadequate (58 per cent compared to 29 per cent that feel it is of a high

level), and that access to finance is a challenge. However, the most worrying results of the survey show that a staggering 72 per cent of respondents feel that finding skilled workers is a huge challenge, despite there being an unemployment rate of 31.4 per cent in the country at the end of 2018 according to the latest figures published in March 2019 by the Kosovo Agency of Statistics (KAS). While Kosovo’s biggest markets are in Western Europe and North America, a number of challenges are hindering the industry. “Visa requirements, a lack of business contacts in target markets and finding the right business partner are the main obstacles in boosting Kosovo’s nascent IT sector,” says Donjeta Sahatciu, president of the board at STIKK. In spite of those challenges, according to the PwC survey the Kosovo ICT sector does have two major advantages: the availability of affordable workspace and access to incubators and accelerators. The need to get women involved Based on data from a PwC Regional ICT Sector Study, 88 per cent of businesses in the ICT sector are domestically owned, with only eight per cent of companies being foreign-owned. In addition, 87 per cent of businesses are owned by men. This is also reflected in the workforce for the sector where there is an 80/20 ratio of male to female workers. That said, there are organisations trying to change this dynamic such as Girls Coding Kosovo (GCK), who hosted the world’s largest game creation event: Global Game Jam, in January 2019. “Our vision is to create a free-ofgender-bias IT sector in Kosovo and the Balkan region by increasing the number of women

in technology and programming, expanding the number of women to consider programming as an academic or commercial profession and encouraging young girls’ early exposure to coding and software programming,” says Alborita Mehana, project coordinator for GCK, adding that she also considers GCK as fundamental to changing the current situation in the technology and programming industry: “Technology is becoming an essential part of our daily lives. There are many fields related to technology; internet, smartphones, social media. There is an obvious lack of women actively working in the technology industry,” adds Ms Mehana. Organisations like GCK are in a prime position to help

OUTLOOK ON KOSOVO

develop the ICT sector in Kosovo, in particular due to the fact that, according to the PwC report, there is inadequate and insufficient education at university level, in particular, when it comes to developing skills such as marketing, sales, project management and business analysis. In addition, there is also a lack of institutions providing specialised training for IT professionals. Other organisations such as STIKK and the Innovation Centre Kosovo (ICK) have also established training academies to combat these challenges. “Given the untapped potential of our youth, this centre [ICK] has become a home to many young people who see it as an opportunity to develop their ideas into sustainable businesses. Basically, they come to us with an idea, and

we offer them tailored services and programs to help them accelerate their businesses,” says Uranik Begu, ICK’s director.

However, finding the right talent will continue to be a challenge. Universities are underfunded and require substantial investment. They only produce around Limited options 350 IT graduates a year and 91 per cent of IT companies survey Based on the STIKK forecast, by STIKK agree that educational 2019 is set to be a great year for ICT programmes do not meet the skills professionals in Kosovo, at least and requirements of the sector. where remuneration is considered. “Kosovo has the youngest They believe that the positive trend population in Europe, but our in the number of employees and youth have limited options living their remuneration will continue. here. They either have to work In addition to that, 25 per cent for someone or create their own of the companies that they business. We also have people who interviewed foresee an increase of are seeking to complement their 50 per cent in the number of their formal education with some ICT employees, while more than half of skills. The only sector that yields IT firms (55 per cent) believe that a positive balance is services,” there will be a 10 per cent increase concludes Mr Begu. • in the salaries of IT specialists.”

OUTLOOK ON KOSOVO

Rebuilding Kosovo Neglected for decades, investment in infrastructure has been a priority for the Kosovo authorities since the country declared independence in 2008. WORDS CLAUDIA PATRICOLO

oad infrastructure is considered as the most important public asset in Kosovo, contributing to both the economic and social development of the country. Demand is growing for quality urban housing, class-A office spaces, government buildings and schools, which leads to road, highways, and other infrastructure needs. The ministry of infrastructure continues has one of the country’s highest budgets for capital investment. “In 2018, in the category of the capital expenditures, the government of Kosovo spent approximately 1.34 billion euros on infrastructures projects: 714 million euros by the central government and 629 million euros by local authorities,” says Diana Metushi Krasniqi, project manager at the Kosovo Democratic Institute (KDI). Challenges remain Corruption is a problem. The KDI claims that in 2016, out of 9.1 million euros spent for maintenance of national and regional roads, a total of 1.9 million euros were “lost”. The ministry of infrastructure has not been sufficiently transparent with regard to the provision of access to documents related to tenders. Of the seven requests for access to public documents submitted to the relevant departments, only four were received a response. The National Audit Office also concluded that some of the key problems are related to delays in initiating procurement procedures. The European Bank for Reconstruction and Development (EBRD) has suggested that Kosovo set up a central unit dealing with the implementation of projects in order to accelerate the process.

“We signed a few large infrastructure projects in 2015 but they have not been implemented yet,” EBRD first vice-president Jurgen Rigterink said at the end of 2018. There are other issues. Delays lead to the extension of contract terms and additional work, a lack of technical specifications regarding the width of roads prevents accurate calculation of road maintenance costs, while awarding contracts without publication of the tender and the lack of proper reporting documentation and registration of works and expenditures all create additional problems and hamper progress. (Not) environment-friendly The KDI has warned that major post-war infrastructure projects have seriously degraded the country’s nature and environment. In particular, it highlighted the degradation of rivers in Kosovo through lowered riverbeds, but also damage done to mountains. “Although Kosovo has built a strategy on sustainable and environment-friendly energy, this strategy has not been implemented into practice yet,” explains Mrs Krasniqi. “Despite Kosovo being very rich in lignite, as the primary source of energy in the country, the current infrastructure dates from 19601970, and is one of the key polluters of the air. Additionally, the industrial waste water that was used for cooling purposes, is a major land polluter in the area of the power plant,” she adds. Similar reports from civil society express concerns about water pollution near the Ferro-Nickel Factory in the municipality of Drenas, where industrial waste waters are disposed in the nearby river, and a battery factory in Mitrovica, where old batteries

have resulted in the contamination of the surrounding land. “The [KDI] report Political Economy of Gravel lists several concerns related damages done to river beds due to the extraction of gravel which is mainly used for road and building construction, and how the government has neglected the oversight of these activities for political gain,” comments Mrs Krasniqi. “But these are not the only attacks on the rivers. Lack of strategic planning on road construction and management of dump pits have also contributed to the pollution of the rivers. This is a major concern as Kosovo faces shortages in sustainable water supplies.

The private industry of wood is a major contributor to deforestation. The current legislation has gaps that are being used to avoid accountability in the matter. Currently, we do not have an official number or percentage of deforestation in Kosovo. Only in 2019, a law came in force to check the pollution caused by vehicles used in Kosovo, so until next year we will not have official data at to what level cars are contributing to air pollution.” Western Balkans initiative to boost infrastructure The government is currently working on amending existing

legislation to meet the EU Acquis on sustainable energy and investments. “Adapting the existing infrastructure to be environmentally friendly will require further investment,” Mrs Krasniqi says. Kosovo’s participation in the Western Balkans Six initiative will likely include additional funding for infrastructure projects, such as railway and road construction. Last year, the government initiated a public tender for the first two segments of a new highway connecting Kosovo with southwest Serbia. Future projects entail public procurement for the Dukagjini highway that will connect major cities in the western part of Kosovo. •

OUTLOOK ON KOSOVO

Kosovars want to travel. Why will Europe not let us? The European Union demands that Kosovars obtain costly, difficultto-procure visas before travelling outside of their home country. This process is discriminatory and must come to an end. WORDS LIRIDON BLAKAJ

Liridon Blakaj is the Prishtina representative of AICS, the Italian Agency for Development Cooperation.

hat a sad fate to live in the heart of the continent called Europe, and not being able to live it. Welcome to Kosovo! Th is story is not a thriller but it is all based on the sad truth of this country, called Kosovo, which I do not want to judge either on the past or on the future but I would simply like to tell a European story. A country that has two million inhabitants and is independent thanks to or because of that very same Europe, continues to be the only country where people live as if they were prisoners at Guantánamo Bay, isolated in the open sky. The citizens of this country are the only ones on the continent who don’t have the right of freedom of movement, with the banal excuse that they do not reach

the political/technical conditions to have such freedom. Officially, because Kosovo is a ‘Kingdom of Corruption’ and organised crime is rife, so it is better to isolate the problem, right? But is Europe not ashamed to use such undignified tactics when it has been present in the country for years and, what's more, practically controlled it for several years? Until now no Kosovar politician has been denied entry to Europe because of corruption. Indeed, the EU bureaucrats have elevated these people to interlocutors. If they are held to such a high standard, then who is corrupt? Regarding crime; when one is called a criminal, this label infers that they do not care for the law, consequently in our case, the criminal elite have no problem crossing borders illegally, as

they have always done and will continue to do so. So since corrupt politicians and international criminals, such as drug traffickers and religious extremists can travel easily to conduct their business which part of Kosovo society is being denied the right to move freely? Luan is a young man of 34, with a specialist degree in sports sciences and he tells me that he never thought of leaving Kosovo, because he has his own house here, a good job, and he knows that nowhere else will be bett er. But Luan would like to be able to go to Europe just to see European gymnasiums and to be able to bring back modern equipment for his gym in Kosovo. Denied! Bardha, 25, a telecommunications architect and fluent in English, French and Italian, as well as

Albanian of course, says she has a good job in Prishtina and is very active in civil society but would like to be able to travel to Europe to meet dostat, a familiar term for friends from these parts. Denied! Perparim, just 31 years old, is an excellent banker in Kosovo and his standard of living allows him to live well here, but he would love to go with his wife to watch Milan play football from time to time. Denied! You can find many people like these in Kosovo, people who do not seem to matter to Europe. Or you could say that if these people met all the requirements,

actually quite difficult if they live and work honestly in Kosovo. But this, of course, is not a problem for the children of the politicians; corrupt as Europe calls them, because for them that amount in the bank is an unremarkable detail. As you can see, it is the healthiest part of society that is being condemned by these restrictions and in doing so, in a certain way, it is actually supporting more corruption and crime. In this country, unlike all the member states of the European Union, no group, association or political party exists or ever existed that has spoken out against the country's accession to the European community, this is not an insignificant statement. But if Europe continues in this way, then young Kosovars - driven by frustration - may rethink these perennial refusals. True, two million Kosovars may not be important to Europe, and how would you expect them to be when a neighborhood in Rome, Paris or Berlin has more inhabitants. But perhaps the European bureaucrats have forgotten about geopolitics and don't remember that this region, from the most ancient empires of the continent, has been desirable precisely because of its geostrategic position. This discrimination is felt everyday by the people in the youngest European republic. Are levels of corruption and crime lower in Kosovo's neighbours? Does the drug trafficking that they would have no problem getting gets pinned on Kosovo drop from the sky? Or does it also pass a visa, and you are right. But there through these countries? is another peculiar condition that I want to be positive and think would leave the majority of young that soon this article of mine will Europeans without a visa: to get be resigned to the past, but for now one, all embassies ask to you to I feel obligated to raise my voice to prove that you have a couple of the injustice and unfairness, in my thousand euros deposited in your opinion, that is being done daily bank account. to the inhabitants of this pocket I wonder how many young of Europe. people, and not just young people As a young man raised and in Europe, have over three digits deposited in their own name today? educated in European universities, with the ideas of European Luan, Bardha, Perparimi and humanism, it makes me feel sad that many others like them could comfortably spend the weekend in my continent can still discriminate an EU capital but to have a couple its inhabitants in this way. • of thousand euros in the bank is

OUTLOOK ON KOSOVO

After Hours

The Eurovision Song Contest is still taken very seriously in emerging Europe. A win boosts national pride while a poor performance can often precede a period of national mourning and introspection. Voting has become increasingly political, and is often an accurate gauge of how various countries view their neighbours. We take a look at the politics of Eurovision on pages 84-85.

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ARTS Film Mr Jones WORDS CRAIG TURP

he story of Gareth Jones, a young Welsh journalist who on a 1933 trip to the Soviet Union managed to elude his minders and travel extensively throughout famine-hit Ukraine, is remarkable for a number of reasons, not least the fact that before Polish director Agnieszka Holland’s new movie Mr Jones, it has never been told on film. Born in Barry in 1905 and educated at Trinity College, Cambridge, a promising career at the UK foreign office was cut short after Jones dared to suggest that another war between Britain and Germany was inevitable (Jones had met Hitler just days before the Austrian became German chancellor; indeed, he flew on Hitler’s private plane). Managing, nevertheless, via his foreign office contacts to procure a journalist’s visa for the Soviet Union, he briefly mixed with the embedded foreign correspondents in Moscow but quickly realised that their Panglossian view of the Stalinist revolution was far from accurate. Aware that there were real stories beyond the capital he set off for Ukraine, where rumours of hunger and famine had been circulating for some time. For nearly a month Jones travelled throughout the country, returning to Berlin on March 29, 1933, where he immediately issued a report, subsequently published by many newspapers, including The Manchester Guardian and the New York Evening Post:

“I walked along through villages and twelve collective farms. Everywhere was the cry, ‘There is no bread. We are dying’. This cry came from every part of Russia, from the Volga, Siberia, White Russia, the North Caucasus, and Central Asia. I tramped through the black earth region because that was once the richest farmland in Russia and because the correspondents have been forbidden to go there to see for themselves what is happening. “In the train a communist denied to me that there was a famine. I flung a crust of bread which I had been eating from my own supply into a spittoon. A peasant fellow-passenger fished it out and ravenously ate it. I threw an orange peel into the spittoon and the peasant again grabbed it and devoured it. The communist subsided. I stayed overnight in a village where there used to be two hundred oxen and where there now are six. The peasants were eating the cattle fodder and had only a month’s supply left. They told me that many had already died of hunger. Two soldiers came to arrest a thief. They warned me against travel by night, as there were too many ‘starving’ desperate men."

The report was met with opposition by much of the western intelligentsia, at the time still sympathetic to the nascent Soviet Union. Walter Duranty, The New York Times Moscow correspondent and de facto head of the foreign press corp published a rebuttal of Jones’ report under the headline “Russians hungry, but not starving”. In the article, Kremlin sources denied the existence of a famine, and said, “Russian and foreign observers in the country could see no grounds for predications of disaster”. Duranty’s nonsense was an example of what would today be called fake news. Far too close to a Soviet leadership which had orchestrated the famine in order to kill the very idea of Ukraine, and to bury it alongside the millions who died, he would later be disowned by The New York Times, which called his Moscow dispatches “some of the worst reporting ever to appear in this newspaper.” His Pulitzer Prize however, awarded in 1932, was never revoked. One of those intellectuals who did believe Jones’ reports was George Orwell, who later admitted that his damning indictment of the Soviet Union, Animal Farm,

was in part inspired by the awful truths Jones had revealed. Indeed, Holland’s film opens with a shot of Orwell at work on the novel, and his growing disenchantment with Stalinism forms an arc across the entire, epic film (it runs for two and a half hours). Mr Jones made its international debut at this year's Berlin Film Festival, to generally positive reviews. “A picture with sinew and strength,” wrote Peter Bradshaw in the Guardian. “James Norton brings his A-game to this film, giving a muscular, sympathetic performance as Jones.” “Holland shows the desperate desire to believe in Stalin; many intellectuals longed for him to be the antidote to Hitler and simply did not want to believe that his policies had caused such horror,” wrote Emma Jones for the BBC, while in Variety, Guy Lodge remarked: “Mr Jones gets better and more soul-stirring as it goes along. After a particularly murky opening act detailing Jones’s embattled time in Britain’s foreign office, things slowly gather pace once he heads for Russia, peaking with a staggering, visceral stretch of survivalist drama in the frozen farmlands of Ukraine — where Holland’s aptitude for skinprickling visual storytelling finally comes to the fore.”

Book Days in the Caucasus, by Banine WORDS CRAIG TURP

ritten in 1945 but never before translated into English, Days in the Caucasus is a coming-of-age story and a portrait of a vanished world. Banine shows us what it means to leave the past behind, and how it haunts us. Banine was born Umm El-Banu Assadullayeva in 1905, into a wealthy family in Baku, Azerbaijan, then part of the Russian Empire. Following the Russian Revolution and the subsequent fall of the short-lived Azerbaijan Democratic Republic, Banine was forced to flee her homecountry - first to Istanbul, and then to Paris. In Paris she formed a wide circle of literary acquaintances including Nicos Kazantzakis, André Malraux, Ivan Bunin and Teffi and eventually began writing herself. Days in the Caucasus is her bestknown work. Translated into English by Anne Thompson-Ahmadova, the book describes the history of Azerbaijan in the 1910s and 1920s, its national culture, mores and customs, drawing on the author's reminiscences. Banine remembers her luxurious home, with endless feasts of sweets and fruit; her beloved, flaxenhaired German governess; her imperious, swearing, strict Muslim grandmother; her bickering, pokerplaying, chain-smoking relatives. She recalls how the Red Army arrived in Baku and established a Soviet government, and how her family lost untold riches. She recalls how, amid revolution and bloodshed, she fell passionately in love, only to be forced into marriage with a man she loathed - until the chance of escape arrived. Her family's departure from Azerbaijan is thoughtfully and movingly told.

Exhibition Animal – Human – Robot, MO Modern Art Museum, Vilnius WORDS CRAIG TURP

aving broken attendance records for private museums in the Baltic region during its first few months of operation, MO Modern Art Museum in Vilnius has opened its

second major exhibition: Animal – Human – Robot. “What have animals and robots become in our lives, and what role do we play in theirs? Our relationships with other life forms and artificial intelligence say a lot about us as human beings, so we have invited artists to help us explore these experiences,” says MO director Milda Ivanauskienė. An important focal point of the exhibition is the work of German artist Hito Steyerl, in 2017 named most influential contemporary artist in the ArtReview Power 100 ranking. Her work has been shown at MoMA in New York and in London and Madrid galleries; she represented Germany at the 2015 Venice Biennale and is the recipient of important Dutch and Danish art festival awards.

This exhibition features Steyerl’s piece Liquidity Inc, in which the artist uses the analogy of water to speak about migration, internet data dissemination, and financial crisis in order to explore how human beings adapt to challenges. The core of the exhibition is made up of the MO Museum collection – a treasure trove of Lithuanian art from the 1950s to the present day. A total of 170 works are shown, including pieces by artists who worked behind the Iron Curtain (Šarūnas Sauka, VincasKisarauskas, Mindaugas Navakas and Romualdas Rakauskas) that were not known to the world, and pieces by some of the young Lithuanian artists currently gaining international attention (Pakui Hardware and Emilija Škarnulytė). A work by Pakui Hardware, which appears on the exhibition catalogue cover, invites us to speculate about future hybrid life forms.

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Animal – Human – Robot runs at the MO Museum until August 25; the complementary exhibition Shared Habitats is open until July 22.

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A political sing-song The Eurovision Song Contest was established in 1956 to unite European countries after the devastation of the Second World War. In recent years, it has done exactly the opposite. Will 2019 be any different? WORDS JERRY CAMERON Joci Papai, Hungary's entry in 2017

love the Eurovision Song Contest, this year set to be held in Tel Aviv on May 18. Not the ghastly music of course: the last decent song to come out of Eurovision was ABBA's Waterloo way back in 1974. No, what I (and, I am fairly certain, many others) tune in for are the results, which since the addition in recent decades of the countries of emerging Europe have become overtly, and often comically, political. They are far more a gauge of national attitudes towards neighbouring countries than they are an objective overview of the continent's musical tastes. Romania, for example, will always offer maximum points to Moldova, a country it considers its own. The favour is not always reciprocated: Russia (when it has not decided to boycott the contest) often bests Romania in Moldovan preferences. Romanians rarely vote at all for the Hungarian entry, while Kosovo has become accustomed to getting nul points from Serbia.

“When you look this is not new. States have always used the song contest in their cultural diplomacy,” says Dean Vuletic of the University of Vienna, a historian of contemporary Europe who specialises in Eurovision. Studies also reveal some less likely alliances: statistically, Bulgaria offers the most points to Turkey – an average of eight – while Bulgaria itself can count on at least eight points per year from Latvia. Sing a song of freedom Not that political shenanigans have prevented countries from emerging Europe from doing well; indeed, many have won. The first country in the region to do so since the fall of communism (the former Yugoslavia won in 1989) was Estonia, in 2001, with the instantly forgettable Everybody by 2XL. “We freed ourselves from the Soviet Empire through song," then prime minister Mart Laar told

crowds after the country's victory. "Now we will sing our way into Europe," he added, referring to EU accession talks, ongoing at the time. Since then, Latvia (2002), Ukraine (2004 and 2016), Serbia (2007) and Azerbaijan (2011) have all won the trophy, always to huge popular acclaim at home. Indeed, the contest now undoubtedly means far more in emerging Europe than it does in Western Europe, where a number of countries (not least the UK) appear to be merely going through the motions. Watching Eurovision on UK television is akin to taking a sarcastic journey across the continent. Current presenter Graham Norton has successfully taken on the mantle of the legendary Terry Wogan, preserving the tradition of commentating while knocking back several large glasses of wine. By the time the latter contestants take the stage, Norton's already flimsy filter has evaporated, leading

to acerbic comments such as: "It's like some children's television presenters got a bit over-excited at their Christmas party," in reference to Moldova's entry last year. Compare and contrast Norton's commentary to that of television channels across emerging Europe, where the merits of the various acts are analysed at lengths usually reserved for parliamentary or presidential election debates. There is very little room for sardonic humour. Eurovision – despite the best efforts of the organisers to make it as ridiculous as possible – is far too sacred in these parts to be poked fun at. Let's get political While Eurovision has rules that prevent entries from being overtly political, a number of songs have in recent years managed to slip through the net. In 2016, Ukraine’s entry, 1944, was widely interpreted as referring to Joseph Stalin’s deportation of Crimean Tatars — which happened in the same year — and Russia’s more recent annexation of Crimea. “When strangers are coming, they come to your house, they kill

you all and say, we’re not guilty, not guilty,” sang Jamala, the first ever Crimean Tatar to perform at the annual music contest. A year later Crimea was again a subject of discord. Russian singer Yulia Samoylova was barred from entering Ukraine (which was hosting the contest) after the Ukrainian security services revealed that Samoylova had toured the disputed region in 2015: Ukraine said this was unacceptable. Russia was offered the option of Samoylova performing via satellite or of selecting a new entrant but decided against both and withdrew from the competition. Instead Samoylova held a concert in Crimea on the day of the 2017 Eurovision Song Contest. When Azerbaijan hosted the contest in 2012 (following its win in 2011) Armenia decided to stage a boycott and did not attend. This was despite Azerbaijan temporarily amending its visa policy to allow Armenians, who are normally barred from entering the country, to attend the event. In 2016, despite the European Broadcasting Union (which organises the event) allowing only the flags of full UN member states to be displayed at

the contest, during the first of that year's semi-finals, the Armenian representative Iveta Mukuchyan was seen holding the flag of the disputed region of Nagorno-Karabakh, sparking a severe backlash from the Azeri press. Beyond the usual rows regarding whether or not it is politically correct to hold cultural events in Israel, this year's event has so far been free of any political overtones. Perhaps not uncoincidentally, it will also - if the bookmakers are to be believed - be a tough year for emerging Europe. The Netherlands entry, Arcade by the not-altogetherDutch sounding Duncan Lawrence is the hot favourite, closely followed by Russia's Scream, performed by Sergey Lazarev. Entries from our region to look out for include Zala Kralj and Gašper Šantl from Slovenia singing Sebi (one of very few entries this year not being sung in English – the song will be performed in Slovenian) and Tamara Tedevski from North Macedonia with Proud. Poor old D-Mol from Montenegro are currently odds-on to finish last. Their song, Heaven, does not appear to be a one-way ticket to paradise. •

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dám Schönberger, founder and director of MAROM, an NGO created to regenerate and reinvent Jewish culture in Hungary, is one of many activists who sees such a black future for civil society organisations in Budapest. “The future is already here. If there is no interest from the EU and the democratic world to intervene in Hungary, most of the NGOs existing today will either disappear or won’t be able to work at the same scale they used to.” A blurred law The law introduced a new category of NGOs: organisations living on foreign support, which now have to register on a special list and display a label on their websites and their publications. Although the law was meant to bring transparency to such foreignfunded organisations, it has served as a tool to stigmatise and silence independent voices. “Based on the 2017 anti-NGO act, some 130 organisations registered as being foreign-supported. The Hungarian Civil Liberties Union (HCLU) and six other organisations decided to boycott the law and infringement procedures are still pending at the European Court of Justice,” says Stefania Kapronczay, the HCLU’s executive director. “The government and progovernment media often refer to our organisations as not compliant with the law, which causes reputational damage”, she tells Emerging Europe. This can affect funding. One human rights NGO was hit so hard by the law that during the last three months of 2018 it had run out of reserves and had to stay closed for weeks, because it couldn’t fill its shelves with the food or basic hygiene products it offers those in need.

87 Mass hysteria

television channels and radio stations with a combined revenue When money is not the problem, of about 190 million euros in 2017, people are. A concerted government to the Central European Press and campaign is exerting leverage Media Foundation (KESMA), on people’s fears, making it almost a foundation founded and run by impossible for NGOs to get their Prime Minister Orbán’s loyalists,” jobs done. Mrs Kapronczay says. “[Viktor] Orbán’s propaganda “These outlets do not provide brings the worst out in people: it balanced reporting about redirects people’s deepest fears the work of independent NGOs,” towards groups that cannot even be Mrs Kapronczay continues. lumped into one, because as long Furthermore, since last year, as we are terrified, we do not talk being homeless in Hungary has about the conditions of hospitals constituted a criminal offence or the lagging education system,” under a new law banning “habitual commented András Fekete-Győr, residence in a public space”. leader of the opposition party Police have the power to remove Momentum. homeless people from the streets In 2017, the village of Őcsény, and destroy any shelters they build. in southwest Hungary, called The same fate awaits all those who an emergency assembly to discuss help them, punishable with fines the arrival of a few people, mostly or imprisonment. women and children, who had The United Nations and already received refugee status the Venice Commission have both from the Hungarian state. They raised concerns and the European were meant to stay for a few days of parliament has approved a report vacation, organised in cooperation which could trigger Article 7 of between Migration Aid and the Treaty on the European Union, a local guesthouse. as it views Hungary risking a breach “People were just shouting things of the EU´s founding values. like, ‘These people are animals, But last year also saw another they’re not even human. They’re controversial law approved by terrorists, they’re going to blow the Hungarian parliament, which things up and rape the children’”, raises even more concerns. By 2020 reported the former Őcsény mayor new courts for administrative cases János Fülöp. will be established giving greater Back then, politicians from the powers to the minister of justice. ruling Fidesz party and government Decisions of these new courts will media insisted that Migration Aid affect fundamental rights such as was settling illegal migrants in matters related to elections, abuses Hungarian villages as part of what it of power by the police, asylum has termed “the Soros Plan”. or the exercise of the right to “I understand that they are peaceful assembly. afraid, because this is exactly what According to the Hungarian government propaganda has set Helsinki Committee, the law out to do over the last two years: will significantly undermine to make Hungarians feel afraid,” the independence of the judiciary, the director of one NGO, who as the boundaries between asked to remain anonymous, told the executive and judicial power Emerging Europe. will be blurred, paving the way for political interference in legal matters. Mixed messages ‘State institution’ doesn’t One of the biggest challenges translate into help for Hungarian NGOs is how to get the right messages across The fact that courts are also the media landscape. siding with the government leaves “In November 2018, a new media NGOs with little judicial support. empire was created by owners “The ongoing smear campaign who donated 476 media outlets, has an impact on cooperation including websites, newspapers, with state institutions, ranging

from schools to the police,” explains Mrs Kapronczay. “Many organisations had fruitful cooperation with such institutions, but they are often terminated or just simply stopped because the state institutions are afraid of cooperating with independent NGOs, especially those engaging in human rights or anti-corruption matters.” The Auróra Community Centre, run by MAROM, is struggling to remain open. Situated in the heart of the eighth district of Budapest, Auróra is a social enterprise which was created to strengthen the civil sector, inspire cooperation among organisations and provide them with publicity. “As a Jewish organisation we have been a target ever since this government came into the picture,” MAROM director Ádám Schönberger tells Emerging Europe. “The municipality has tried to close Auróra many times, sending drugs controls, trying to buy the building in order to evict us, sending policemen every day. According to them we are a problem for the neighbourhood because of the noise that comes from our centre. The municipality created an ad hoc resolution, according to which if at least 50 per cent of our neighbours complain, the place will be closed. Their employees went door to door asking people to sign a petition, but they didn’t get even close to 50 per cent. So, the district mayor himself went door to door, promising building renovations for all those who signed. They still didn’t succeed,” he adds defiantly. The future looks black for all NGOs in Hungary whose work does not conform to the government’s agenda. Mr Schönberger still hopes that the EU will intervene and stop treating Hungary as a democratic country, perhaps even cutting off EU funds. Perhaps the most pertinent point was made by the NGO which, so fearful for its future and of government reprisals, it asked me to keep its name out of this piece: What will remain of this country, if there is so much hatred and fear in the people? One day Hungary will have no more refugees, but the hatred and the fear will remain. •

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Six of the best restaurants in emerging Europe There was a time not so long ago when few people travelled to emerging Europe for the food. Great restaurants were thin on the ground and service was invariably appalling. Over the past decade, all of that has changed. We pick half a dozen fabulous places leading emerging Europe's culinary revolution. WORDS CRAIG TURP

Tbilisi, Georgia Long summer evenings were made to be spent on the rooftop of Bina 37, where the outstanding food is surpassed only by the amazing selection of fine Georgian wines, many made in traditional terracotta jars, qveri, by the gregarious owner Zurab Natroshvili. The sassy staff take great care in paring the right wine with the right food and create an atmosphere more reminiscent of being a guest in a Georgian's

Bina 37

The Artist

home. And as anyone who has visited the country will know, few nations on earth do hospitality as well as the Georgians. Add in live music, a traditional Georgian menu given a contemporary twist and you have the epitome of a 21st century restaurant. Takes some finding, hidden away as it is on a nondescript side street, but that's half the point. A wonderful place to contemplate and enjoy the finest things in life. facebook.com/bina37bina37

Amandus

Bucharest, Romania The work of an extraordinarily talented Dutch chef, Paul Oppenkamp, The Artist is exactly what the name suggests: a restaurant where the preparation and presentation of food is raised to an artform. A seasonal menu makes use of the finest ingredients – some of which Oppenkamp now grows in the garden of the sumptuous fin de siècle mansion on Bucharest's legendary Calea Victoriei that houses the restaurant. The tasting menus, which offer foodies the opportunity to try all of the dishes currently on the menu, are a sensorial exploration of flavour. Oppenkamp's signature dessert, his sublime cucumber sorbet, is a treat no visitor to the Romanian capital should forego. theartist.ro

Vilnius, Lithuania

likeminded stars-in-the-making who create exquisite, precision-like It took a while for the new dishes that are as supremely tasty Baltic cuisine revolution to hit as they are effortlessly beautiful Vilnius, but the wait was more than in design. And for once, vegetarians worthwhile. Amandus is the work of have not been forgotten by the crew: Deivydas Praspaliauskas, regarded there is a tasting menu that will suit for many years now as the best all palates. Find it on Piles gatve, and most adventurous chef in the oldest and these days most the Baltics. Here he has brought flamboyant street in the city. together a savvy young team of amandus.lt

Hiša Franko

Kobarid, Slovenia Close to Slovenia's border with Italy, Hiša Franko is a restaurant quite literally on the cusp. In the kitchen is Ana Ros, Slovenia's finest chef who prepares dishes made with locally-sourced ingredients, all foraged, farmed or fished specifically for Hiša Franko. The Soča valley in which the restaurant is located is a paradise destination: turquoise

wild waters, green natural pools of a warm Nadiža river, almost tropical forests and flowering pastures. Behind the restaurant, there is a huge herb, flower and vegetable garden, and beside it you can hear a lively creek, home to a small family of trout. Hiša Franko’s sommelier is Valter, Ros's husband, curator of the finest cellar in the country. hisafranko.com

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Kraków, Poland An octopus and saffron risotto is the last thing most visitors will expect to find on the menu of a restaurant in Kraków's Old Town, but that's the kind of venue Garden is: full of hidden treasures both on the menu and in the leafy courtyard that gives the place its name. There are no fewer than three great chefs at the controls, Dominik Sas, Tomasz Turecki and Patryk Potepa, who combine simple yet rich flavours to fabulous effect. The warm, wood-infused interior is a delight and makes eating here a memorable occasion even when poor weather means that the garden it out of action. gardenrestauracja.pl

Garden Budapest, Hungary

Costes

Ezster Palagyi is one of just four chefs in Hungary to hold a Michelin star, and the only woman. Her unique combination of flavours combines traditional Hungarian food with the elegant techniques of French cuisine to create a fusion rich in both taste and artistry. There is also a playful side to Palagyi's food, which comes across in almost every dish. The location itself is a gem, where linear, modern design complements the food and wine, itself an attraction: the cellar is perhaps the best in Budapest and features a cracking selection of local and imported grape. Costes, as you would expect, is incredibly popular and reservations are needed well in advance. It's worth the effort. costes.hu

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48 hours in Sibiu Sibiu is the envy of just about every other city in Romania. Boasting a gorgeous central square lined with beautifully renovated medieval houses, the city offers a chance to experience a multicultural Romania once thought lost forever. WORDS CRAIG TURP

Why visit now?

f Transylvania is arguably the best of Romania, then Sibiu - founded in the 12th century by Saxon settlers - is arguably the best of Transylvania. Home to Romanians, Saxons and Hungarians, this melting pot of cultures is where Orthodox, Protestant and Catholic churches happily co-exist, often quite literally side-by-side. The city – neglected for much of the 20th century – has seen a renaissance in recent decades, and was a European Capital of Culture in 2007, the first Romanian city to hold the honour. One of the direct descendants of its original Saxon founders is Romania's current president, Klaus Iohannis, credited with overseeing the city's revival during his time as mayor.

While Transylvania is never more picturesque than when covered in snow, winter can be bitterly cold and often grim. The moment spring arrives however, Sibiu heads outside and stays there until winter returns: eating, drinking and most cultural events are all done al fresco. Sibiu hosts the European Council in May, the main event of Romania's presidency of the rotating European Union presidency. Arriving Sibiu's international airport is served by flights from across Europe. It's a short taxi ride from the city centre. From the city's train station it is just a ten minute walk (albeit uphill) to Sibiu's magnificent central square, Piața Mare. The Big Square Sibiu's showpiece central square, Piața Mare (quite literally, the Big Square) is indeed grand, in every sense of the word. Its

colourful medieval houses all have narrow, distinctive windows set into the roofs that suggest beady eyes watching all below. The Brukenthal Museum (once the home of the city's finest son, Samuel Brukenthal) is home to a fine collection of Old Masters, while the splendidly linear Lutheran church (where Romania's president worships most Sundays) vies for attention with the 13th century Turnul Sfatului (Council Tower), whose steps can be climbed for fabulous views of the entire city and the usually snow-capped Fagaraș mountains beyond. Car free, cafes and restaurants with enormous terraces offer fine local food, and there are concerts and festivals most summer weekends. Bridge of Lies Behind Piața Mare is a smaller square, known as Piața Mica (yep, you guessed it, the Small Square). Just about every house is home to a café, restaurant or bar. There is also the rather bonkers Ethnographic Museum, created

to house the eclectic collection of explorer Franz Binder who spent decades in Africa collecting antiquities and fine art. In 1862 he donated the lot to the city of Sibiu, at a stroke creating the first real museum of non-European art in Transylvania. A few doors down Kulinarium offers great local food (you will need a reservation at the weekend), while the Casa Luxembourg is one of the best guest houses in the city, complete with elegant rooms and views over Podul Minciunilor (the Bridge of Lies). Today packed with tourists taking selfies, legend has it that lessthan-reliable merchants would use the bridge to sell goods of questionable provenance.

to visit Sibiu's magnificent Orthodox cathedral, built in 1906 in neoByzantine style and one of the most eye-catching Orthodox churches in the country. Strada Nicolae Bălcescu ends at Piața Unirii, dominated by the enormous Hotel Continental. On the southern side of the square are remnants of Sibiu's old city walls.

91 The Transfagarasan Highway

The road to Paltiniș

A tram once ran from Sibiu's suburbs to the small town of Rașinări, and you can follow the now abandoned tracks on foot or bike towards the Dumbrava forest (there is a bus, number 22, for the less fit). The open-air Astra Museum is a wonderful skansen where well-preserved houses, churches, windmills, Strada Nicolae Bălcescu workshops and farm buildings from across Transylvania provide Pedestrianised from start to finish a fascinating insight into regional and perfect for evening promenades, traditions and folklore. Allow Strada Nicolae Bălcescu links a full day here: there are two good medieval Sibiu with the newer part restaurants within the museum. of the city centre. The faded grandeur Opposite, the Sibiu Hilton is of the Imparatorul Romanilor hotel the city's finest hotel, complete still attracts many visitors, and its with large swimming pool and split-level rooms are somewhat superb restaurant. A further half unique if not quite as luxurious as an hour up the road (either by taxi they once were. Casa Frieda offers or by bus) is the mountain resort of great local food on a sublime street Paltiniș. Long a retreat for writers terrace and comfortable rooms. it today offers skiing in winter and Take a detour a block or two south gentle hikes in summer. •

Romania's most famous road, which crosses the Fagaraș mountains and reaches 2042 metres at its highest point was completed in 1974 and made famous by an episode of Top Gear a decade ago. It has since become one of the country's most popular attractions. The 25 kilometre drive up the most spectacular part of the highway, from Cârțișoara to the lake at Balea, takes around 45 minutes, although at weekends - when half of Romania's cars often appear to turn up - it can take double that. There are a number of small memorials to those who worked (and died) on the road, but the main stopping point on the way up is Balea Cascada (the Balea Waterfall). A cable car from here runs to lake Balea, and during the winter (when the road beyond this point is closed) is the only way up. There is no scheduled public transport from Sibiu (or indeed from anywhere) up and over the highway, so you will need to hire a car.

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48 hours in Sarajevo Countless cities in Europe claim to be ‘Where East Meets West’, but all must bow-down to Sarajevo in that particular category. History here stretches back to the Neolithic period, all the way through the empires of the world through to its current incarnation as the capital city of an independent Bosnia and Herzegovina. The so-called Jerusalem of Europe has been home to all the continent’s great religions, and it continues to straddle the divide between them worlds today. WORDS JOHN BILLS

Why visit now? Does one really need an excuse to visit Sarajevo? Few cities offer as much as the Bosnian capital. Food lovers will be in dreamland, while history buffs will find themselves overwhelmed with the sheer amount of stories from Sarajevo, from ancient times to the present day. Sarajevo may not be the undiscovered gem that some wish it was, but it remains a gem that all should discover for themselves. Get your bearings Sarajevo is surrounded by mountains, so much so that the technique required to f ly into the city has a place in pilot textbooks worldwide (the so-called

‘Sarajevo Approach’). The airport is located six kilometres from the train and central bus station (themselves located three kilometres from the Baščaršija). Avoid taxis outside the stations — public transport is simple and easy to use. Buy your tickets from a kiosk, and don’t forget to validate your ticket. Buses from Serbia arrive and depart from Istočno Sarajevo bus station in Lukavica, a 40-minute bus ride from downtown. Sleep Sarajevo is a major international centre for visitors of all means, so it is no surprise to find a healthy mix of accommodation options for all budgets. The Holiday Inn retains a certain macabre charm thanks to

its wartime reputation, and there are a number of five-to-three-star hotels throughout town. Haris Youth Hostel remains the best of the hostels, located on Vratnik but well worth the uphill slog. Anyone who opens a hostel at the age of 15 (as its owner did 15 years ago) deserves respect. Baščaršija (the Old Town market, if your tongue is tied) Where better to start the grand tour of Sarajevo than the heart of the city? Sarajevo’s Baščaršija is the main event and rightly so, a charming collection of narrow alleys lined on both sides by a wide variety of stores that offers as much for the tastebuds as it does the souvenir shelf. Modern day tat shops and incarnations

of historic crafts dominate the latter, while the Old Town is home to many of Sarajevo’s best restaurants. The Emperor’s Mosque is the highlight, the first mosque built in the city.

a long pedestrian street called Ferhadija that is lined with shops, cafes and parks full of old chaps playing oversized chess. Ferhadija climaxes with the Eternal Flame, a does-what-it-says-on-the-tin monument to lives lost during A little bit of history (in fact, a lot) World War II. Double back towards the Old Town via the street named Take time to stroll along after Mula Mustafa Bašeskija and the Miljacka river and soak in you’ll pass the Markale market, Sarajevo’s storied past. The Latin today a bustling centre of trade Bridge is its most famous spot, that has recovered from the horrific a relatively innocuous bridge that massacres of the war. played host to the spark that set the world aflame for half a decade at Tunnel Museum and Ilidža the beginning of the 20th century. It was here that Gavrilo Princip Also known as the Tunnel of assassinated Franz Ferdinand way Hope, this underground walkway back in 1914, giving the world powers was built in the first half of 1993 as the excuse needed to set World War I the people of Sarajevo desperately in motion. The Museum of Sarajevo tried to release the pressure of sits opposite the bridge. Sarajevo the violent siege. Just a small City Hall is nearby, a magnificent portion of the tunnel remains but structure reconstructed its story is told in the museum, following major damage during one of the city’s most visited the Bosnian war. sights. The museum is located in Ilidža, Sarajevo’s main suburb and Eternal flame a fascinating historic spot in its own right, once described by the English Sarajevo’s Old Town gives way media as ‘one of the most beautiful to its more modern equivalent, places in the world’.

A city of hills Sarajevo is surrounded by hills, and you don’t need to be an expert to realise that the best views of this beautiful city can be found way up high. The most popular vantage point comes from the White Fortress (Bijela Tabij), a 16th-century fortress that now lies in ruins in the Vratnik neighbourhood. The views are breathtaking, and the addition of a setting sun makes this Sarajevo’s most beautiful spot. The best restaurants in Bosnia and Herzegovina Food lovers are in their element in BiH, a statement that is doubly true if grilled meats are your thing. The country’s finest restaurants are found in the capital city, a conveyor belt of quality that covers traditional Bosnian cuisine and more contemporary fare. Klopa, Apetit, Cakum Pakum and Libertas are the pick of them, while little Buregdzinica Sac serves the city's best burek. •

Sarajevo in One Paragraph How to sum up somewhere so vibrant and engaging in one paragraph? Sarajevo is many different things to many different people, a treasure-trove of history and culture that serves up the best food in a country famous for toothsome fare. The truth is that there is more to Sarajevo than glowing words — this is a city that demands your attention and won’t struggle to keep it.

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Alice Taylor is a freelance journalist and writer. She runs the Balkanista blog.

Life in Albania WORDS ALICE TAYLOR

you have been fed and watered to bursting point as well as being given raki, the local liqueur made from fruit that pretty much fuels the entire country. The city of Tirana is unlike no other European city. Its architecture is a colourful yet confused mish-mash of Italian fascist, modern contemporary, and communist developments that are now painted in an assortment of vibrant colours or adorned with beautiful hand-painted murals. You can visit old communist bunkers that have been turned into museums, drink coffee in one of its many coffee shops (Tirana has the highest number of cafes per capita on the European continent), visit its numerous bazaars or take a cable car up Dajti Mountain and enjoy some traditional food whilst hen most people flamingos, rolling plains of fertile think of Albania, farmland, and of course, mile upon looking out over the Tirana plain to the ocean beyond. they probably think mile of unspoilt golden sands and But each city and locality in the of the Liam Neeson film Taken. crystal waters. To compliment its country has its own particular Hollywood and the media have diverse and truly breathtaking done a very good job at painting scenery, you can enjoy hundreds of charms. The people of Shkodra this Western Balkan country castles and forts, medieval villages, in the north are known for being as a hotbed of criminality and Roman ruins, natural parks, hiking artists and musicians and having a great sense of humour, the people violence, but is that really the case? trails, and mountainous villages of Berat are renowned for their The short answer is no. where you can pause time and hospitality, and the southerners Whilst the country struggles switch off from the stresses of are famous for their slow and internally with organised crime every day life. Albania has it all in laidback attitude towards life and and politics, for those choosing just 29,000 square kilometres. their penchant for frappes. All to visit the country, or as I like to When it comes to the people, of these areas are most definitely call it “the final wild frontier of you will be hard pressed to find worth a visit - Shkodra for its lake Europe”, it is a safe, fascinating, a more welcoming and hospitable and culturally rich gem that is just bunch. Despite having been cut off and castle, Berat for its wine and saffron fields, and the south for the dying to be explored. from the world by half a century The Land of the Eagles, or of oppressive communist rule, you archaeological gem of Butrint and Shqiperia in the local language is wouldn’t know it from the way that the islands of Ksamil. To condense what I love about home to just over three million visitors are received. Basing their Albania, and why you need to people. With the vast, vibrant, and traditions of hospitality on the consider visiting it into just one colourful metropolis of Tirana in teachings of the ancient Kanun of the centre of the country, other Leke Dukgjini (a set of feudal rules post is all but impossible and I towns and small cities fan out and laws, some of which prevail to cannot impart with words the joy that exploring this country around it stretching right to the this day) they are honour bound over the last 18 months has given borders of Montenegro, Kosovo, to treat all guests with the utmost me. Just be sure to leave your Macedonia, and Greece. To the west respect and kindness. preconceptions at the door and be lies the Adriatic Sea and the coast Whilst English is not widely ready to embrace a totally new way of Italy, and to the south, the Greek spoken outside of the capital or of looking at the world. island of Corfu sits just a few tourist areas, people will do their For a country that has suffered kilometres across the water. best to communicate, buy you In terms of its terrain, there is a coffee or beer, and make sure that for so long under the occupation of little that this country does not you are truly enjoying your stay in so many, it is now emerging from have - vast mountain ranges capped the country that they are so proud its chrysalis and is ready to show the world the true meaning of the with snow, canyons and rivers that of. If you are lucky enough to be are perfect for rafting, luscious invited into an Albanian home, phrase “Balkan gem”. • forests and wetlands full of you can expect to leave only after

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Emerging European football is stuck in a rut WORDS CRAIG TURP

t is not all that long ago that Dynamo Kyiv, Steaua Bucharest and Red Star Belgrade were names to be reckoned with in European football. Dynamo Kyiv were the first team from behind the Iron Curtain to win a European trophy – the now defunct CupWinners Cup - in 1975. They would repeat the feat in 1986, the same year that Steaua became the first team from the region to win the European Cup, the forerunner of the Champions League. Miodrag Belodedici, an elegant Romanian sweeper, would become the first player to win the cup with two different teams in 1991, when Red Star were champions (he had also been a member of the Steaua side before defecting to Yugoslavia in 1988). All three teams still regularly win their local leagues (although not with anything like the frequency they used to) but have made little impact in European competition

for some time. Shaktior Donetsk, bankrolled by Ukrainian oligarch Rinat Ahmetov, did win the Europa League in 2008 but the victory was a mirage, an exception and not the new rule. Football in emerging Europe is in a rut, with little sign that we should expect improvement any time soon. National teams have fared little better. Croatia memorably reached the final of the World Cup last summer, but their success masked huge problems with the Croatian domestic game. Since then, Croatia's form has been poor. Poland and Ukraine both have talented squads of players and are probably the pick of emerging Europe's teams, but neither strikes much fear into the game's bigger names. Next year, the European Championship will for the first time be hosted by more than two countries: 12, in fact. The semi-final and final will be played at Wembley, in London, but Baku, Bucharest and

Budapest will all host group stage and round-of-16 matches. It would have been nice if the event could have served as a showcase for the revival of Azerbaijani, Hungarian or Romanian football. As things stand, there is a strong possibility that none of three countries will actually qualify for the final tournament. Success in football is usually the result of a long-term project, even if occasionally, a welldrilled team of quickly assembled mercenaries (such as Shaktior in 2008) can do well. Buying in talent is not an option for national teams, however, and long-term thinking is thin on the ground in emerging Europe, with football no exception. As such, although the stadiums in Baku, Bucharest and Budapest will be filled to the rafters come next summer, it will not be Azerbaijan, Hungary or Romania the assembled fans will be cheering on. •