Daily Briefs

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06 June 2022, Monday | NIAS Europe Daily Brief #220

Bulgaria’s and Croatia’s accession into the Eurozone

By Ashwin Dhanabalan 

Bulgaria’s and Croatia’s accession into the Eurozone

On 27 May, Bulgaria’s coalition government approved the country’s plan to join the Eurozone by 01 January 2024. However, their attempt to join the zone has been shadowed by political uncertainty and the coalition government’s issues toward joining the Eurozone. Croatia, on the other hand, plans to become the 20th country that adopts the Euro. The European Central Bank (ECB) stated that Croatia had cleared the economic criteria to join Europe’s single currency. Croatia is set to join the bloc by 01 January 2023. 

Roadblocks ahead 
Concerning Bulgaria, the country is likely to have setbacks in achieving its goal to join the Eurozone by 2024. This is because the country’s inflation has averaged 5.8 per cent, which is above the maximum limit of 4.9 per cent. Additionally, Bulgaria is falling short on its legal governance and structural reforms. It does have an advantage compared to Croatia, as its government’s debt is below the recommended 60 per cent of its GDP. 

Bulgaria’s socialist and populist parties have been calling for a more measured approach to the Euro’s implementation. Chairman of the parliamentary finance committee Lubomir Karimanski highlighted that the party wanted to make people aware by organizing “a large-scale information campaign, certain criteria must be met, the benefits and risks must be defined.” Corruption is another factor that Bulgaria has to curb to meet the nominal criteria for joining the Eurozone.

Croatia would not have issues joining, but it would become the below-par level country in the bloc due to its GDP per capita of USD 14,000 in 2020, while the other countries of Greece and Latvia, also considered as sub-par economies, have a GDP per capita above USD 17,500. Croatia does not have inflation challenges but does have a government debt equal to 7.98 per cent of its GDP. 

Consequences of Bulgaria and Croatia joining the Eurozone 
Bulgaria’s Pro Russian nationalist party leader Kostadin Kostadinov stated that the consequences of joining the Eurozone would have negative connotations for Bulgaria’s economy. He added that the Euro adoption would lead to double-digit inflation, reduced salaries, income, and savings. But, for Croatia, it would benefit the country as tourism contributes to one-fifth of its economy. Croatia is also planning to join the Schengen border-free travel zone, encouraging tourists from Western Europe to traverse across freely. 

Joining the Eurozone has its own drawbacks: the countries have to adopt standard economic policies, establish joint institutions to coordinate monetary and economic policies and follow a uniform trade policy for non-member countries. Moreover, once Bulgaria and Croatia join the bloc, they would be equally susceptible to economic shocks such as the European debt crisis. 

EU’s Eurozone strategy in reintegrating the Balkans
The war in Ukraine has shifted Europe’s attention to its Balkan states and is looking to integrate countries through the EU’s enlargement process. With Ukraine, Moldova, and Georgia applying for EU membership, it is evident that Europe is looking to push for a more homogenized European identity. However, the Balkan region specifically faces resistance to Europeanisation due to strong ethnic differences and the ongoing issues of migration. 

Thus, the Eurozone could be seen as an economic strategy to reintegrate the Balkans. The Eurozone membership of the two countries aligns with the EU’s Economic and Investment Plan (EIP) of EUR 30 billion for 2021-2017 to increase cooperation within the region. In addition, China has been pivoting toward the geostrategic region through its 16+1 initiative. This comes as China has invested about USD 9.1 billion in loans and plans to sign more comprehensive strategic partnerships with countries to foster bilateral relations. 

Krassen Nikolov, “Bulgaria’s eurozone accession debate split along Macedonian veto lines,” Euractiv, 03 June 2022
Slav Okov, “Political bickering in Bulgaria poses obstacle to euro goal,” Bloomberg, 03 June 2022 Martin Arnold, “Croatia given green light by ECB to join euro in January,” Financial Times, 01 June 2022
Convergence Report reviews Member States’ preparedness to join the euro area and paves the way for Croatia’s euro adoption on 1 January 2023,” European Commission Press Release, 01 June 2022 
Bulgaria sticks to plan to adopt the euro in 2024 amid coalition squabbles,” Reuters, 27 March 2022 
B Rahul Kamath, “Why the Western Balkans matter to the European Union?,” ORF, 22 October 2021

War in Ukraine: Day 99
By Rishma Banerjee
War on the Ground
On 05 June, after more than a month of relative peace, explosions rocked Ukraine’s capital, Kyiv, and hit a rail car facility. Ukraine’s army and the railway chief said that the attacks were done through missiles fired from the Caspian Sea.
President Volodymyr Zelenskyy in his nightly address spoke about his visit to Lysychansk, and Soledar cities. These two cities are close to Sievierodonestk, where the Russian aggression has been concentrated in, for the last few days.
On 04 June, Zelenskyy reported that a Russian artillery attack had destroyed part of the Svyatohirsk Lavra monastery complex, which belongs to the Ukrainian Orthodox Church. He also shared footage of the same on his official Telegram challenge. However, Russia has denied the reports and their involvement in the same, accusing Ukraine instead.
The governor of the Luhansk region, Serhiy Gaidai said that Ukraine’s forces have been successful in reclaiming 20 percent of the territory that had been lost to Russia in Sievierodonetsk. This is significant because it comes after a heavy counter-attack was launched by Ukraine, following Russia’s concentrated attack to capture the city. However, Gaidai also reported that Russia was blowing up bridges across the Seversky Donets river. He observed that this might be an effort to block Ukraine from calling in reinforcements and to prevent a quick retreat to Lysychansk, a city on the other side of the river.
Ukraine’s Interior minister, Denys Monastyrskiy said that the intelligence services were communicating with the fighters who surrendered at the Azovstal steelworks. He mentioned that they looking into all avenues to ensure their speedy release, even though Russia wants to try them as war criminals.


The Moscow View:
Claims by Russia

On 05 June, in an interview broadcast, President Vladimir Putin issued a warning to the US about their plans to send Ukraine longer-range missiles. President Biden recently announced that the US will be sending M142 High Mobility Artillery Rocket Systems, or HIMARS, after receiving assurances that these weapons will not be used against Russia. But Putin said that the US can expect a strong response from Russia if they plan to go through with their promise.

The website for the ministry of construction, housing, and utilities in Russia seemed to be hacked and was reportedly being redirected to a "Glory to Ukraine" sign in Ukrainian. The state news agency, RIA said that, in spite of the breach, the users’ data has been protected.
Major General Roman Kutuzov, a high-ranked official in Russia’s army was killed in eastern Ukraine. This was reported by a state media journalist but nothing was mentioned about precisely how, where on when the general was killed.
On 04 June, in a brief interview, Putin spoke about Russia’s anti-aircraft forces. He said that they have been successful in shooting down ‘dozens’ of Ukrainian weapons, and are "cracking them like nuts.” But, no clarification was received with regards to what kinds of weapons he might be alluding to.
On 04 June, Russia’s defence ministry reported that they have shot down a Ukrainian military transport plane that was carrying weapons and munitions. This incident took place near the Black Sea port of Odesa. Another outpost in the Odesa region, with foreign mercenaries, was also destroyed by a strike. They also updated that an artillery center in the Sumy region has been struck.


The West View:
Responses from the US and Europe 

On 05 June, in a statement, Austria’s chancellor, Karl Nehammer said that the EU should make provisions for membership for Ukraine and Moldova. He suggested a preparatory space be made which will be an intermediate stage between cooperation and full membership. He said that amidst this war, a full quick accession is not possible, but provisions must be made so that a “strong, independent and economically successful” Ukraine can survive.
Despite Putin’s warning to the US of a strong response, UK has declared that they will be sending long-range rocket artillery to Ukraine. They will supply handful of tracked M270 multiple launch rocket systems, which can hit targets 50 miles away. Spain is also looking to ramp up their support for Ukraine. According to El Pais, they have pledged anti-aircraft missiles and Leopard battle tanks. They will also be providing training to Ukraine’s military on how to use these tanks.
On 04 June, France’s president Emmanuel Macron said that he is confident that they can play a significant role in mediating peace talks between Russia and Ukraine once the active fighting stops. In an interview with the regional newspapers, he said: "We must not humiliate Russia so that the day when the fighting stops we can build an exit ramp through diplomatic means." Ukraine’s foreign minister, Dmytro Kuleba however responded to the same comment and said that anyone saying that they should not humiliate Russia was only humiliating themselves. He said: “Calls to avoid humiliation of Russia can only humiliate France and every other country that would call for it… Because it is Russia that humiliates itself. We all better focus on how to put Russia in its place. This will bring peace and save lives."
After a meeting with the MED5 group in Venice, the Interior minister of Cyprus said that the Mediterranean countries which fall on major migrant routes will be expecting more than 150,000 arrivals from Africa and the Middle East, this year. According to the UNHCR, last year there were 123,381 migrant arrivals, but this year, the countries are expecting a rise in the numbers. This is primarily because of the food shortages caused by the conflict in Ukraine.  


The Global Fallouts:
Implications of the Ukraine war

On 04 June, Pope Francis said that he is preparing to meet officials from Ukraine, to discuss the logistics of a possible visit to the county. Ukraine’s ambassador to the Vatican, Andriy Yurash, however, mentioned that he is yet to receive any communication about the same.

On 03 June, Senegal’s president Macky Sall spoke about his conversation with president Putin. He mentioned that Putin seemed to be willing to ease the process of exporting Ukraine’s grains to the world. Sall, who currently serves as the chairman of the African Union has been talking to Putin about grain export, amidst a rising food security crisis in Africa. He, however, did not mention if Putin attached any conditions to allow the vessels to leave Ukraine.

Maya Yang and Léonie Chao-Fong, “Russia-Ukraine war: what we know on day 102 of the invasion,” The Guardian, 05 June 2022
Samantha Lock and Martin Belam , “Russia-Ukraine war: what we know on day 103 of the invasion,” The Guardian, 06 June 2022
Pavel Polityuk and Max Hunder , “Kyiv rocked by blasts from Russian cruise missiles, Ukraine says,” Reuters, 05 June 2022
Bogdan Kochubey “Ukrainian President Zelenskiy travels close to front-line near Sievierodonetsk,” Reuters, 06 June 2022
Ukraine has retaken about 20% of territory lost in Sievierodonetsk, regional head says,” Reuters, 04 June 2022
Russia is blowing up bridges in Sievierodonetsk to thwart Ukrainian reinforcements, regional governor says,” Reuters, 04 June 2022
Russian artillery hits monastery in Ukraine's east, says Zelenskiy,” Reuters, 04 June 2022
Ukraine's intelligence in communication with captured Azovstal fighters, minister says,” Reuters, 04 June 2022
Guy Faulconbridge, “Putin warns United States against supplying Ukraine longer range missiles,” Reuters, 05 June 2022
Russian ministry website appears hacked; RIA reports users data protected,” Reuters, 06 June 2022
Russian general killed in eastern Ukraine, Russian state media reporter says,” Reuters, 05 June 2022
Russia says it shoots down Ukrainian military plane with weapons,” Reuters, 04 June 2022
Putin says Russian anti-aircraft forces 'cracking' enemy weapons 'like nuts',” Reuters, 04 June 2022
Austrian Chancellor calls for intermediate EU membership for Ukraine,” Reuters, 05 June 2022
Russia must not be humiliated despite Putin's 'historic' mistake, Macron says,” Reuters, 04 June 2022
Europe's south expects over 150,000 migrant arrivals this year, minister says,” Reuters, 04 June 2022
Philip Pullella, “Pope says he will meet Ukraine officials to discuss possible trip,” Reuters, 04 June 2022
Senegal leader says Putin showed readiness to free up Ukrainian grain exports,” Reuters, 04 June 2022

By Padmashree Anandhan 

Turkey to produce high-tech drones with laser capabilities
On 04 June, Turkey announced the mass production of “miniature munition” to install in the unmanned aerial vehicles. The munition will be produced by TUBITAK a Defense Industries Research and Development Institute (SAGE). It carried out various tests to integrate into Bayraktar TB2 aerial vehicle. According to the manager of the company: “Mass production of the institute’s first UAV munition Bozok has started, we have developed the penetrating warhead for Bozok. We’re going to have some related firing tests.” The Bozok will be a compact, lightweight, and semi-active laser seeker in comparison with other Turkey drones. (“Turkey starts mass production of laser-guided munition for its drones,” P.A Turkey, 05 June 2022)

COP26: Glasgow summit promised climate goals to show the weaker contribution
On 05 June, BBC reported on how countries were performing on the set goals in the COP26. At the Glasgow climate summit, all the countries agreed to provide their climate plans to cut down carbon emissions. This was done to ensure the global temperature was kept below 1.5 degrees Celsius but in the post-pandemic recovery the temperature was on the increasing range. Till now only 11 countries have submitted their climate plan out of 196 countries. Since the COP26 meeting, China is observed to have taken a maximum effort to reduce carbon emissions. One of the key steps taken by China is stopping the funding to “coal-fired power projects.” Such efforts are predicted to contribute 27 per cent to world emissions. (Esme Stallard, “COP26: Are nations on track to meet their climate goals?,” BBC, 05 June 2022)

Rafael Nadal wins the French Open
On 05 June, Spain tennis player Rafael Nadal won the French Open claiming his 14 titles and defeating Norway’s Casper Ruud. In the overall ranking, he will move two steps ahead of Rodger Federer and Novak Djokovic. Since 2010 Nadal has won back to back in the Australian Open, and French Open. After the win, Nadal said: “It takes a lot of energy to keep going. I want to say 'merci, merci beaucoup, I don't know what will happen in the future but I will keep fighting to keep going.” (Jonathan Jurejko, “French Open: Rafael Nadal beats Casper Ruud for 14th Roland Garros title,” BBC Sport, 05 June 2022)

Germany’s economic minister to visit Israel and the French Minister hold talks with UAE for energy cooperation
On 05 June, Deutsche Welle reported on the four-day tour of Germany’s economic minister Robert Habeck to Israel. During the minister’s trip, the discussion with Israel will focus on three fronts, energy and climate cooperation, “high-tech” collaboration, and the purchase of “Arrow 3 missile shield system.” The key reason to hold talks with Israel is to find alternate energy to Russian imports. Israel can be a potential supplier to Europe as it holds the Leviathan gas field located in the Mediterranean Sea which has the capacity to produce 12 billion cubic meters per year of gas. Apart from this it also has an underwater pipeline to supply gas to Turkey and southern European countries. At the end of the trip, Habeck is expected to hold a joint conference with the Middle East and North African states. The conference will focus on intensifying cooperation on the energy fronts and solar energy. French foreign minister on the same lines held talks with UAE on receiving oil and diesel. He said: “We have to find an alternative to Russian petrol.” (Jens Thurau, “German Economy Minister Robert Habeck seeks new partnerships with Israel and Jordan,” Deutsche Welle, 05 June 2022; “Le Maire: France in talks with UAE for Russia oil alternatives,” POLITICO, 05 June 2022 )

British Council find no trace of racial discrimination in the investigation against worker complaints
On 06 June, a British Council officer in Kenya has come under criticism for disregarding complaints relating to “racial discrimination and harassment.” According to a regional head, the workers had reached out to the government about mistreatment to bring down the reputation of the Council. At the same, the British Council has launched two individual investigations to look into the complaints of the staff. In the investigation report, the Council stated that it found no hints of racism but it agreed on the existence of employee relations and operations. In the statement released it said: “has concluded that there was no evidence of racial discrimination, bullying or harassment as complaints raised against staff members could not be substantiated.” (Sebastian Whale, “British Council criticized for handling of discrimination complaints in Kenya,” POLITICO, 05 June 2022)

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