Government to dismantle Ignalina nuclear power plant


Lithuania’s government has decided to stop operations at the Ignalina Nuclear Power Plant and immediately dismantle it. This decision was made at a cabinet session on November 20, the Lithuanian government’s press service said.

This means that the dismantling of the plant will begin immediately after it has completely stopped operating and will end in the thorough cleaning efforts on the land on which the plant’s facilities were located in order to remove any radioactive waste,” Interfax quoted the press service as saying.

The government has also considered dismantling the plant at a later time, in which case the land will be cleared of radioactive waste 35 years after the plant’s dismantling. The government has given preference to dismantling the plant immediately. Experts with the International Atomic Energy Agency (IAEA) and the State Inspection Lithuanian State Nuclear safety Inspectorate share this view.

Lithuania is expected to stop operations at the first unit of the Ignalina Nuclear Power Plant before 2005 and to fully stop the plant by 2009. This summer, Lithuania and the European Union agreed that the second unit will be stopped before 2009 if the EU provides sufficient financial support.
Negotiations are currently being conducted on the amount of this support. The EU suggests allotting 70 million Euro annually for work aimed at stopping the plant in 2004-2006, but Lithuania thinks that this amount is not enough. Lithuania is required to fully stop the plant in order to enter the EU.
The EU believes that the two Soviet-made RBMK reactors used in the plant are dangerous. The Ignalina Nuclear Power Plant produces almost 75 percent of Lithuania’s electrical power.

Adamkus: Lithuania to continue good relations with Russia


Lithuania’s foreign policy is aimed at the promotion of good-neighbour relations with Russia and the reinforcement of regional security, Lithuanian President Valdas Adamkus said at a press conference after US President George W Bush’s visit to Vilnius. Lithuania is to become a full-fledged NATO member in the early spring of 2004.

Interfax quoted Adamkus as saying he and Bush discussed Russia’s attitude towards the enlargement of NATO and further good-neighbour relations between Russia and the Baltic countries. Bush briefed the presidents of Lithuania, Latvia and Estonia on changes in Russia’s attitude to NATO enlargement, he said. Moscow calmly accepted this process, he added.

On the same note, Lithuanian Foreign Minister Antanas Valionis expressed confidence that the country’s planned entry to NATO would “make (Lithuania’s) favourable relations with Russia even better.”

Valionis said Russia was one of the subjects discussed by Bush and Adamkus.

“The US president stressed his good relationship with the Russian President, Vladimir Putin, and good relations between the US and Russia and between NATO and Russia, something that would undoubtedly create a qualitatively new kind of security both in Europe as a whole and in Lithuania,” the minister said.

Asked about prospects for Lithuanian-Russian relations in light of Lithuania’s forthcoming entry to NATO, Valionis said: “I’m sure that Lithuania, having achieved a qualitatively new level of security, will be able to become even more open for cooperation with Russia.” “Lithuania’s entry to NATO changes the situation, but solely for the better,” he added.

Lithuanian Defence Minister Linas Linkevicius also said the Baltic country’s accession to NATO would not hinder its mutual cooperation with Russia, including in the sphere of defence. “I have no doubts that even after Lithuania enters NATO, the positive tendencies towards the development of cooperation, mutual understanding and confidence between the defence structures of Lithuania and Russia, which emerged in the past few years, will continue,” Linkevicius said.

Bush has reaffirmed that the three Baltic countries’ membership in NATO would boost their security. NATO is prepared to defend its members, Bush told a crowd that gathered on a square in Vilnius on November 23. Those who would want to make Lithuania their enemy will become the enemy of the United States, he said. Lithuania, Latvia and Estonia will never again have to fight aggression single-handedly, he added.

Adamkus said in turn that integration into Europe and the Euro-Atlantic family is the shortest path to Lithuania’s security and prosperity.

The United States has actively backed Lithuania “through thick and thin,” and remained a reliable ally that never recognised the occupation of Lithuania, he said.

Earlier, Adamkus said that after a decade of preparations for accession to NATO, Lithuania has grown stronger and is a mature democratic state. He said his country has become an example of peaceful life, accord and tolerance in Central and Eastern Europe, and has assumed the role of joining the future NATO members into the so-called Vilnius Ten. “Whole generations have tried to join Lithuania to a safe Europe, and independence was restored for this purpose 12 years ago,” Adamkus told a briefing.

Meanwhile, Valionis said Bush, in talking to Adamkus, hailed Lithuanian efforts to solve the problem of the Russian Baltic exclave of Kaliningrad. Bush thanked Adamkus for his constructive position on the Kaliningrad transit issue and asked the Lithuanian leadership to wrap up technical consultations in the same vein. Lithuanian parliament speaker Arturas Paulauskas and Prime Minister Algirdas Brazauskas also met with Bush. Adamkus decorated Bush with the Grand Cross of Vitulkas the Great for his role in the expansion of bilateral relations and support for Lithuania’s integration into NATO.

Regulators seeking lower mobile interconnection charges


The Estonian Communications Board is planning steps to make mobile communications firms lower interconnection fees which are presently several times higher than those of fixed-line operators, BNS quoted leaders of the regulator as saying on November 25. The head of market regulation department at the Communications Board, Tarmo Osman, has told reporters the Communications Board has pondered declaring mobile companies as operators with significant market power (SMP) on the interconnection market, but the existing legislation doesn’t permit to do this. The Communications Board is looking into other possibilities on how to make mobile telephone companies reduce their interconnection charges. Osman would not reveal what measures the regulator was planning, but added that concrete steps could be made in the near future. At best, interconnection fees could be cut up to two times. In that case the fee would stand at 1.5 kroons (0.01 Euro) per minute. Osman said that in some European countries fees had already reached that level. At this point only fixed-line operator Eesti Telefon, which has been declared an operator with SMP, must establish cost-based interconnection fees due to its SMP status. Lower interconnection fees and intense competition would probably result in lower prices for the consumer.

Tallinn hosts 6th festival Black nights


On November 23, Estonian capital Tallinn saw the launching of the sixth cinema festival Black nights, which will show 335 movies from 51 countries. The forum programme coordinator Tiina Lokk said the festival started with a series of films for children and youth, including 100 films and 78 cartoons. The main program of the festival, to begin November 29, comprises 117 movies – feature and documentary films shot in the recent two years. One hundred and seventy-three films by East European cinematographers, including Russia, will be shown as well. Russia is to present 12 movies, among them Andron Mikhalkov-Konchalovsky’s House of Fools, Kira Muratova’s Chekhov’s Motives, Yuri Grymov’s Collector, Igor Minayev’s Moony Meadows, Alexander Mitta’s Red-hot Saturday, Yegor Mikhalkov-Konchalovsky’s Antikiller, etc.

Estonia to support a US attack on Iraq in principle


The National Defence Council decided on November 25 that Estonia would offer the United States moral support in the event of a military action against Iraq, RFE/RL reported. Prime Minister Siim Kallas said Estonia would allow the use of Estonian airspace for such an operation, if necessary, although he expressed doubt that such a request would be made. He described as unrealistic the idea that Estonia could contribute something militarily in the event of an attack on Iraq. “We do not have available resources for that…. Our peacekeeping, mine-clearance, and logistics units are already deployed elsewhere,” he said. However, Kallas pledged that if the United States turns to Estonia with a specific request for help, his country would certainly agree to fulfil that request.

Canada to reopen its ports to Estonian fishermen


In talks in London on November 21-22, Ain Soome, head of the Estonian Environment Ministry’s fishery department, and representatives of the Canadian Fishing Administration reached an agreement under which Canada will again open its ports to Estonian fishing boats, RFE/RL reported. Canada on April 9 closed its ports to fishing boats from Estonia because of what it called “clear evidence of violations” of shrimp-fishing quotas off its east coast. Estonia countered that the Canadian estimates were incorrect and that it was not exceeding the quotas.

Nemtsov approves of NATO entry


Leader of the Russian Union of Rightist Forces and Duma Deputy Boris Nemtsov congratulated Estonia on its invitation to join NATO and said relations between Russia and Estonia might improve with the NATO invitation because both sides might be free of their complexes. Nemtsov also praised Estonia’s economic reforms.

Russian oil tactics towards Latvia harmful to both


Russia’s plan to take control of Latvia’s oil port of Ventspils by withholding crude shipments appears to be hurting its own exports in the near term. Shipments through the underused outlet are down 42 percent. As Russia pressures Latvia to gain control of a key oil facility, reports suggest that the tactics are harming the interests of both countries.

Over the past six months, the Russian pipeline monopoly Transneft has slashed oil supplies to the Latvian port of Ventspils in a strategy aimed at taking over the export terminal, RFE/RL quoted oil traders and officials as saying.

Despite Russia’s surge in exports by nearly all routes this year, business has nearly stopped at Ventspils, which once served as a major outlet to Europe. Last month, an unidentified Transneft official said that either “Ventspils will dry up,” or it “should be controlled by the Russian side.” While exports of Russian and transit oil rose four percent in the first 10 months of the year, exports through Ventspils dropped by over 42 percent, the Russian Energy Ministry said on November 4.

In the first nine months, earnings at the Ventspils Nafta enterprise plunged 88 percent to 1.9 million lats (USD 3.1 million) as revenues of 24.1 million lats slipped 34 percent.

Kalniete against ratifying national minorities convention


Latvian Foreign Minister Sandra Kalniete said that there is no need for the former Soviet republic to ratify a convention on national minorities since the current legislation already guarantees the rights and development of minorities. In Latvia, the development of minorities is guaranteed by the 1991 law on the rights of national and ethnic minorities to unimpeded progress and by the 1998 law on education, Interfax quoted him as telling a press conference on November 25.

The minister recalled that in France, where she was an ambassador during the past five years, she was met with surprise when she said that schools for national minorities in Latvia were financed by the government. France is one of the few European countries that has not ratified this convention but “no one dares to say that the rights of national minorities in France are flouted,” Kalniete said.

Latvia joined the convention in 1995 but has not yet ratified it, citing the lack of funds for its implementation. International experts have repeatedly urged Latvia to ratify this document. As have most European countries, Lithuania and Estonia have already ratified the convention.

Russia lashed out at Latvia for its failure to ratify the European Council’s Convention on the Protection of National Minorities. While stipulating the right to secondary education in one’s native language for national minorities, the convention also guarantees schooling for non-citizens. It also includes other obligations, including cash spending, which Latvia cannot afford at this point.

Latvian government accepts amendments to energy bill


The Latvian government accepted amendments to the energy law, envisaging to launch liberalisation of gas market to provide a possibility for consumers to choose alternative natural gas suppliers. The Economics Ministry told the large gas consumers would be able to use services of another gas supplier whose tariffs will not be regulated by the regulator, the Public Services Regulatory Commission. “Amendments to the law should in no way be related to tariff growth,” Economics Ministry spokesman Kaspars Paupe said explaining position of the ministry.

Amendments also can not affect the litigation between Latvijas Gaze gas utility and Latvian state in which Latvijas Gaze demands gas price for the large consumers be withdrawn from the regulation. The amendments do not concern the merit of the dispute, Paupe was quoted as saying. “On the opposite, the rivals will be able to appear now,” he added.

The legislative amendments were drawn in line with the European Union directive on uniform rules for internal market of natural gas, aimed at ensuring safety and flexibility of gas supplies and competition on the gas market to serve interests of consumers within fully open internal gas market embracing the entire territory of the EU without internal borders.

Latvijas Gaze said previously the amendments contradict to sales contract closed between Latvijas Gaze and the Latvian state in 1997 which states that Latvijas Gaze will have exclusive right to do natural gas transportation, distribution and storing until 2017. But the Economics Ministry said even after the law is adopted the transportation and distribution of natural gas will take place using the existing infrastructure.

The law will only create a mechanism for access to that system for the price set by the public services regulator. “No one is set to take away the exclusive licence of Latvijas Gaze,” Paupe said.

The present energy law does not provide conditions for natural gas market liberalisation or access by a third party to natural gas transportation, distribution and storage infrastructure. The amendments still have to be adopted by the parliament.

Tele2 network available to 92.5% of residents


Latvia’s Tele2 mobile operator has expanded its network coverage by 13.6 percent over the previous year, with the operator’s services today available in 83 percent of Latvia’s territory, BNS quoted the company as saying. The network expansion makes Tele2 communications available to 92.5 percent of Latvia’s population. This year Tele2 has improved or introduced its network in numerous places across Latvia, including Dunalka, Ilukste, Valdemarpils, Jurkalne, Piltene, Staicele, Dundaga, Allazi, Pavilosta and others. Tele2 has installed 40 new base stations and plans to install over 13 more base stations by the end of the year. The operator would not reveal the number of its clients.

Latvia’s other mobile operator, Latvijas Mobilais Telefons (LMT), has its network covering 95.1 percent of Latvia’s territory making the mobile communications available to 95.6 percent of Latvia’s residents. In mid-November LMT had 449,200 clients or 19.2 percent of Latvia’s population.

Flanco considers plan to merge with foreign firms


Flanco, a Romanian home appliance retailer, announced it is mulling a plan to join forces with a foreign company, like German Media Markt or British King Fisher. “It’s been on our agenda for quite some time now, as the two investment funds – Oresa and Danube Fund – have to prepare their exit,” Flanco International board President Florin Andronescu was quoted as saying by BBW. “We are considering joining a major retail chain in the next few years, and we have already established contacts with UK-based King Fisher and its French divisionD-Arty.” According to Andronescu, Flanco will report a turnover of 45-46 million Euro this year. The company believes its turnover for next year will reach 60 million Euro.

Dutch companies eyeing project to expand Constanta Harbour


CPH Foreign Projects and Boskalis International, two companies based in The Netherlands, have expressed an interest in taking part in a project to expand the Constanta Harbour (northern Romania). The project is worth USD 70 million. According to BBW, the feasibility study will be finalised by IPTANA and Royal Haskoning in mid-December.

Eurogate Group shows interest in Constanta container terminal


Eurogate Group, represented by an Italian delegation, announced it is willing to take part in a tender for the operator of the new Constanta container terminal. Headed by La Spezia Container Terminal Director Marco Simonetti, the Eurogate Group visited the Maritime Port Administration to examine the project’s potential, according to BBW. Eurogate Group is active in several container and transport terminals in cities like Genoa, Milan, Bremen, Dortmund and Hamburg.

Saab to launch new sport sedan on Romanian market


The Romanian arm of Swedish carmaker Saab, Augusta Motors, said the company will introduce a new 9-3 sport sedan model, which should generate sales of 60 units next year, according to BBW. Augusta Motors general manager Horatiu Ionescu said the new model will help boost the company’s sales figure in 2003. The Romanian unit reported sales of 100 units in the January-October period of the year.

APAPS sells Tufon to CD Plan for 1.06 mln Euro


Romanian’s Privatisation Authority (APAPS) has sold a 98.98 percent stake, or 1.57 million shares, in the Craiova-based cast iron smelting group Tufon to CD Pan, according to BBW. The deal is worth 1.06 million Euro, APAPS said. Tufon’s current share capital stands at 39.75 billion lei, which is split into 1.59 million shares. The company, which reported a debt of 109.41 billion lei at the end of September, has a 350-strong staff.

Aro hoping to attract investor interest for stake sell-off


Aro, an off-road carmaker, is hoping to attract investor interest for its sell-off, according to BBW. This will be the second time the company is pushing for a sale. Aro posted a turnover of USD 9.1 million in the first six months of the year, against USD 7.8 million in the same period of 2001. The company’s losses increased three-fold to USD 2.86 million. Total debt volume reached USD 19.4 million. The company said it believes it could become profitable if its monthly output stands at 400 units, but added it would need a subsidy of more that USD 1.5 million. Overall sales in the first seven months of the year totalled 903 units. Romania’s Privatisation Authority (APAPS) holds a 68.7 percent stake in the company, which has a share capital of 264 billion lei.

Sensiblu investigation continues


The Financial Guard of Romania said it has yet to determine on its course of action concerning the investigation of international auditor PricewaterhouseCoopers (PWC) and its connection with Dutch firm Sograno’s buyout of Sensiblu and Mediplus, and alleged tax evasion worth millions of US dollars, according to BBW. PWC was advisor on the Sensiblu deal.

Financial Guard Deputy General Commissioner Marian Pasulea was quoted as saying, “We do, however, pay special attention to any consultancy company, whether one of the big four or small local firms, after the Enron and WorldCom scandals. We are currently investigating some audits made by specialised firms because they seem suspect of over-evaluating the companies of their clients.”

Meanwhile, Doru Bulata, senior member of the Office board, said: “All I can say at this time due to confidentiality is that our investigation is advancing.”
According to Pasulea, once a person is suspected of fraud and an investigation is launched against him/her, it automatically means that any company(ies) affiliated with this person will get investigated too. “When there is any hint of suspicion about one company in which that person is a shareholder, of course we would check on the other companies as well,” Pasulea said.

Bush stresses significance of Washington-Bucharest relations


US President George W Bush travelled to Bucharest following the November 21-22 NATO summit in Prague. The US leader spoke at length about the strong ties between the United States and Romania, and how this former communist state will help bolster the alliance’s presence in the world. Scores of people attended the ceremony to hear the president speak.

“Today we reaffirm the friendship between your country and mine,” Bush said. “I’m honoured to carry a message to the people of Romania: We proudly invite you to join NATO, the great alliance of freedom.

All around us are reminders of Romania’s history and the culture we share. Close by is a church three centuries old, a symbol of the faith that overcomes all oppression. In this square, we see monuments to Romanian patriots who lost their lives and liberty – for the liberty of your nation.”
“The US president reminded everyone of how Romania “broke free” 13 years ago, showing the world that its courage is what set the country free. “And here in December of 1989, you broke the silence of your captivity. From that balcony, the dictator heard your voices and faltered and fled. Two generations of bitter tyranny ended, and all the world witnessed the courage of Romania, the courage that set you free,” the US leader said.
According to Bush, Romania is making great strides to ensure that its relations with bordering states are fruitful, preserve tolerance and select free markets and rule of law. “… instead of dictatorship, you have built a proud and working democracy,” Bush told Romanians.

“The path of freedom you have chosen is not easy, but it’s the only path worth taking. I know that your hardships did not end with your oppression. America respects your labour, your patience, your daily determination to find a better life. Your effort has been recognised by an offer to NATO membership.

“We welcome Romania into NATO,” he added. “NATO’s invitation to join is also a vote of confidence that you will continue the hard work of political, economic and military reform. And as you do, you will have partners in all the nations of NATO. The promises of our alliance are sacred, and we will keep our pledges to all the nations that join us. Should any danger threaten Romania, should any nation threaten Romania, the United States of America and NATO will be by your side.”

Bush underlined Romania would be better protected with NATO membership. On the flip side, NATO too will profit from Romania, as the country has been stellar in the international fight against terrorism, especially considering its efforts in Afghanistan.

“The world has suffered enough from fanatics who seek to impose their will through fear and murder. The NATO alliance and the civilized world are confronting the new enemies of freedom, and we will prevail.” Bush said. “Your country also brings moral clarity to our NATO alliance … The people of Romania understand that aggressive dictators cannot be appeased or ignored. They must always be opposed.”

Navibulgar close to USD 20 mln loan deal


Sofia Privatisation Agency (PA) is expected to issue a permit for the Navigation Maritime Bulgare (NaviBulgar) to draw a USD 20 million syndicated loan, the largest portion to be extended by Lloyds Bank, with one of the corporation’s ships used as a collateral, NaviBulgar’s board Chairman Slaveiko Staikov stated last week clarifying that talks had yet to be finalised. Since 50 percent of the amount of one of the loans is paid, the mortgage over two of NaviBulgar’s vessels will be lifted and they will restore their Bulgarian flag. As the company announced, posted by, the USD 20 million loan is needed for the completion of the construction of the Trapezitsa and Dolly vessels by the Varna Shipyard. All tax evaluations of the Varna Shipyard’s assets were due to be finalised late last week, which is needed for NaviBulgar to calculate the municipal fee due for assuming ownership rights over the shipyard. More specifically, NaviBulgar needs to make a decision on whether to pay a two percent fee over the amount of 35.5 million Bulgarian lev-bid at the tender for the Varna Shipyard, or to pay two percent over the total taxation due. The insurance evaluations of the movable property are completed. After the fees are installed receiver Anelia Ananieva Srandeva will allow NaviBulgar to assume ownership of the shipyard.

LUKoil prices stable under ministry deal


LUKoil Bulgaria and Bulgaria’s Finance Ministry were to sign an agreement on keeping fuel prices unchanged in 2003 early last week, despite hikes in excise duties. Under amendments to the Excise Duties Act the duty on fuels will increase by 100 Bulgarian levs per tonne to spike fuel prices by 10 percent. According to the agreement, reached by the ministry and Bulgarian unit of the Russian oil giant, LUKoil, the increase in the excise duty will be LUKoil Neftochim refinery, thus keeping the price of fuels unchanged.

Higher BCC capital to boost DSK privatisation


An extraordinary general meeting of the shareholders of the Bulgarian Consolidation Company (BCC) was expected to approve the capital rise of BCC with the shares of Bank DSK. The cabinet ruled the transfer of 75 percent of DSK Bank to the Bank Consolidation Company in early October. The purpose of the transfer is to facilitate the privatisation of the last Bulgarian state-owned credit institution. The government’s DSK equity will be used to raise capital that will boost the capital of BCC from 25,998 mln Bulgarian levs to 96,486 million.

BAT inks Lufthansa aircraft contract


Balkan Air Tour BAT has agreed the lease of two Boeing 737-300 planes with Lufthansa Technik. According to, the rent was reduced by some 10 percent. BAT will use the planes for its regular international flights. If possible, these planes will go on charter flights. It is also envisaged the two planes to be used for the regular international flights of Balkan Airlines. Prior to the agreement, the International Air Transport Association gave code 623 to Balkan Air Tour.

Government says no to pork imports – foreign


Bulgaria has banned the import of pigs, pork and products thereof from the German states of North-Rhine Westphalia and Rhineland-Pfalz, Rocherath in Belgium and Luxembourg following reports of swine fever outbreak in these areas, the Agriculture Ministry announced recently, cited by BTA. The ban was signed by the minister and does not apply to products that have been heat-processed in a technology known to destroy the swine fever virus. Meat imported to Bulgaria before the ban took effect will be sent for thermal processing. According to the agency’s reports, the National Veterinary Service will control the observation of the ban.

Elbit Systems, Israeli firm in joint tender bid


Israel Aircraft Industries and Elbit Systems have agreed to cooperate on a large overseas defence tender. At stake is a USD 700 million tender for unmanned aerial vehicles (UAVs), published by the Turkish Ministry of Defence, cited by Globes. IAI and Elbit Systems are usually competitors. The two companies battle each other for jet fighter upgrade projects, especially for Russian-built planes, and both produce UAVs. The two companies have never cooperated on this scale; the cooperation on the Turkish tender is intended to improve their chances of winning.

Sources informed Globes that IAI and Elbit Systems are offering Turkey IAI Military Aviation Group’s Heron UAV and Elbit System Silver Arrow’s Hermes UAV. The two companies will probably participate with Turkish consortium headed by TAI Tusas Aerospace Industries, Savronik, and STM (Savunma Teknolojileri Muhendislik). Turkey’s undersecretary for defence industries (SSM) has received five bids for new UAVs for Turkey’s armed forces from international companies in recent months. Israel has strong relations with the Turkish army and air force, becoming Turkey’s leading foreign supplier of military and defence equipment.

The Heron is IAI’s longest endurance UAV, capable of staying aloft for 50 hours, giving it especially long-range capability. The Hermes is Silver Arrow’s newest generation UAV, with battlefield and frontline electronic intelligence gathering capabilities. The Hermes 1500 strategic model can stay aloft for over 24 hours, carrying payloads of over 350kg.

F1’s Ecclestone picks Istanbul for 2005 Grand Prix


Formula One chief Bernie Ecclestone has chosen Istanbul over two other Turkish cities competing for rights to hold a grand prix in 2005, the Turkish motor sports federation said last week, quoted by the TDN.

Turkey has been campaigning hard to win the rights to host one of two Grand Prix slots expected to become free by 2005 and in August took Ecclestone on a tour of three candidates – Istanbul, Izmir and Antalya. The Turkish motor sports federation TOMSFED said Ecclestone had told them that he favoured Istanbul and now wanted to push ahead with finalising the deal. “Now we need to finalise the commercial issues and the TV rights,” TOMSFED quoted Ecclestone as saying in a letter, cited by the same agency. Rallying and other motor sports are already popular among the wealthy in Turkey, a European Union membership candidate of nearly 70 million people, but the country has no track suitable for Formula One.

BRSA decision on SDIF null and void – report


The Council of State Administrative Cases Department general assembly unanimously annulled the decision of Chamber 10 and stopped the execution of the decision of BRSA, Anadolou Agency reported recently. The general assembly said BRSA did not sufficiently examine the demand to transfer Pamukbank to Yapi Kredi Bankasi. BRSA earlier said that under its decision on June 18, 2002, Pamukbank’s management and control were transferred to the SDIF in accordance with the third and fourth paragraphs of Article 14 of the Banking Law as it was proved that the bank had not taken the necessary measures under provisions of the banking law, that it was impossible to strengthen its financial structure even if it had taken those measures, that total commitments had exceeded its total assets, that continuation of its banking services endangered rights of its depositors and stability and reliability of financial system, and that it was suffering a USD two billion of capital deficit as of December 31, 2001.

SPS presents Wilh. Wilhelmsen future strategy framework


Barkon Turkey, a member of the Barwill Group of Companies, will host senior executives from the Wilh. Wilhelmsen Group and Barwil Agencies, which between them have more than 200 offices in over 60 countries worldwide, Turkish Daily News reported last week.

Main topic of the seminar will be ways to generate greater synergies between the companies of the Group, provide customers with sophisticated logistics outsourcing and supply-chain management services, with particular focus on the strategic importance of Turkey.

The Strategic Planning Seminar (SPS), which was due to run from November 30 until December 1, 2002, is a forum wherein the group’s top executives lay the framework of the strategy that will guide Wilh. Wilhelmsen and Barwil during the next five years. Bringing together senior management from around the world, one subject on which the seminar was to focus, is the importance of Turkey as a logistics centre, capitalising on its strategic location at the crossroads of Europe, central Asia, the Caucasus and the Middle East.

Turkey’s increasing strategic importance in the logistics industry reflects a globalised world economy and Turkey’s growing role as a petroleum transshipment point. With a great deal of experience in petroleum and project shipment, Barwil and Barkon plan to increase their involvement in these segments of the logistics industry, complementing and expanding focus on Supply Chain Management (SCM).

Turkey says will start using World Bank loans next year


Given Turkey’s delay in fulfilling economic criteria completely, most of the World Bank loans will be used next year. According to Anadolu Agency reports, Turkey will receive USD five billion as a programme loan from the bank for three years within the framework of the Country Assistance Strategy (CAS). Officials were quoted as saying that besides the specific conditions related to the loans, Turkey’s move to start meetings with the IMF and gain the Fund’s approval would be important criteria for the release of the loans.

A total of USD 375 million of the second tranche, worth USD 760 million of Economic Reform Loan (ERL), is expected to be released to Turkey by the end of March 2003. But privatisation should be accelerated and the energy market should be privatised in order to get this loan.

Turkey will ask the World Bank to extend the period to get USD 1.350 billion of Programmatic Financial and Public Sector Adjustment Loan (PFPSAL-2), USD 450 million of the second tranche and USD 450 million of the third, if the necessary conditions cannot be fulfilled till the end of the year. It is recalled that the first tranche of the loan was received last August. Meanwhile, USD 100 million of the second tranche of the Agriculture Reform Implementation Project (ARIP) is expected to be used in the first half of the following year, if the developments in the implementation of agriculture reform satisfy the bank.

Investors express concerns, wary of spending money in Turkey


Turkey’s New Prime Minister, Abdullah Gul, rapidly moved to dispel international investors’ fears that his Justice and Development Party (AKP) was linked to a controversial court decision that threatens to unravel bold banking reform. According to a Financial Times report, the court’s recent ruling to suspend a takeover by regulators of Pamukbank, the country’s sixth largest bank, for posing a threat to the banking system, sent the international bond markets lower as it cast doubt on a key plank of International Monetary Fund-backed reforms.

In his interview with The Financial Times, Gul stressed that “no promises” were made at a meeting held before the November 3 election between AKP leader Recep Tayyip Erdogan and former Pamukbank owner Mehmet Emin Karamehmet, who is challenging the seizure of the bank in court. Gul, in particular, commented that listening to people’s complaints did not necessarily mean “promising anything.”

Last weekend, Gul also pledged sweeping legal reform to enable the judiciary to function impartially and efficiently. The international community is still nervous over the direction an untested pro-Islamic party might take the country. AKP, which won general elections this month by capitalising on popular anger at the outgoing three-party coalition after a devastating economic crisis last year, has proved sure-footed so far. Although the Council of State’s decision is not yet final, the recent ruling puts at risk the credibility of the quasi-independent Banking Regulation and Supervision Agency (BRSA). It has also generated deep concern at the IMF, which has underwritten sweeping banking reform with a USD 16 billion loan to Turkey.
If the takeover is finally cancelled by the Council of State, the BRSA will be forced to return Pamukbank to Karamehmet, after withdrawing the USD 1.4 billion in treasury bills injected into the bank as part of the watchdog’s rescue operation.

In this case, Karamehmet will have to come up with funds to make the bank solvent or face a new takeover.

Gul appeared to narrow Karamehmet’s options by vowing there would be no bailouts for him or any other former owners of failed banks. “I know the IMF is very sensitive on this issue. So are we because it’s public money,” Gul aknowledged, cited by FT, clarifying that the government would be in no position to allocate money since such decision would raise same request by other banking services.

AC Kapital now majority owner of Hotel Union


Financial company AC Kapital is now the majority owner of the Ljubljana-based Grand Hotel Union following its acquisition of a 44.67 percent stake in the hotel. The takeover bid, which offered 2,500 tolars (10.9 Euro) per share, now means that together with the previously held stake, AC Kapital owns 56.33 percent of Hotel Union, Slovenia Business Week reported. The company viewed the takeover as a friendly one, believing that Hotel Union will have good opportunities for development with AC Kapital, which is a subsidiary of Autocommerce, a leading retailer of cars, computers and manager of tourist facilities. In recent years, Autocommerce, also the majority owner of the Slovenian capital’s Austrotel hotel, has expanded operations with the acquisition of a number of firms companies dealing in financial services, tourism and information technology. Grand Hotel Union, with a staff of around 160, last year posted revenues totalling 1.88 billion tolars (8.2 million Euro).

New Fructal output eyes entry on foreign markets


In what is considered one of the firm’s biggest ever investments, Slovenian beverage producer Fructal has launched a new bottling line valued at 2.25 billion tolars (9.8 million Euro). The new production line, which commenced operations Monday before last, will bottle fruit juices – the company’s flagship products, which have enjoyed a sharp increase in sales over recent years, Slovenia Business Week reported. The new equipment aims to boost Fructal’s presence on foreign markets, including Italy, the Czech Republic and former Yugoslav nations. According to Fructal chief executive Marjan V Mir, the company presently exports 58 percent of overall production, with plans set to raise the volume of exports to 75 percent within five years. Based in Ajdovscina, the company is majority owned by the country’s leading brewer Pivovarna Lasko. In the year to September, Fructal sold over 896,000 hectolitres of drinks, representing a 10.5 percent increase compared to the same 2001 period.

Port of Koper records increase in transhipment


In the first three quarters of this year, the Port of Koper loaded 7.7 million tonnes of cargo, representing a one percent increase on the same last-year period. Revenues amounted to 11 billion tolars (47.9 million Euro), while gross profits came in at 6.6 billion tolars (28.7 million Euro), Slovenia Business Week said. In addition to higher revenues, the Port of Koper announced a further increase of transhipment of cargo, despite an anticipated recession in international trade. The concern shipped 55 percent more general cargo compared to the same 2001 period, 20 percent more fruit, while the transhipment of wood increased substantially by 17 percent. The transhipment of cars did not see any change. According to general manager Bruno Korelic, the company still records a high value added per employee of 51,000 Euro, while investments for 2002 are expected to surpass three billion tolars (13 million Euro). Acknowledging that 2003 will prove difficult due to uncertain international economic trends the CEO noted, however, that Port of Koper plans to increase transhipment to almost 10 million tonnes.

Gradis, HSE ink Sava hydroelectric plant deal


Construction company Gradis and HSE, holder of a licence to build five hydroelectric plants on the lower Sava, Thursday before last signed a contract to build a first plant on Sava – the HE Bostanj. Deemed the official outset of the construction of the largest energy project in Slovenia, the project is estimated at 95 billion tolars (414 million Euro), Slovenia Business Week reported. Gradis will likely need about six months to prepare for the actual construction, which has been costed at 790 million tolars (3.4 million Euro) alone. All five power plans are slated for construction over the next 15 years.

Croatia still looking for strategic partner for ironworks


Croatian Prime Minister Ivica Racan last Monday stated that recent developments at Sisak’s Ironworks have made it difficult to secure a strategic partner for the bankrupt firm.

Speaking with reporters before a session of his Social Democratic Party’s presidency, Racan noted: “Certain people there act as though the strategic partner has been secured and that the Ironworks’ future is ensured, which is not something the government decides on, but the market.”

The premier explained that although there were already strategic partners who have expressed an interest in the company, their names could not be revealed until the government has thoroughly evaluated each offer. The problem is that the search for a strategic partner could take longer than expected, in which time workers might demand payment of wages for that period. “There is no money and the only possibility is increasing the budgetary deficit by 2-3 billion (kuna), bringing inflation,” Racan commented.

Atomske Toplice Spa mulls expansion in Croatia


Southern Slovenia’s Atomske Toplice spa resort has plans to build an apartment village in neighbouring Croatia. In the first phase of development, in 2004, the complex will consist of 25 apartment units with 100 beds. Zdravko Pocivalsek, manager of the spa resort, told the press Friday before last that a joint company in Croatia will be established for the project.

For the Slovenian side of the resort, the “Aqualuna water park,” there are plans to build a pool with artificial waves. However, the biggest investment that year will be the construction of the four star Olimia hotel boasting 150 rooms and 300 beds. According to Pocivalsek, the total value of all these investments has been estimated at 13 million Euro.

The Atomske toplice spa, which has been granted the ISO 9001/2000 certificate of quality and aims to the leading spa resort in Slovenia, in the first 10 months of this year, resort hosted 50,566 guests (16 percent foreign visitors) and recorded 1.6 billion tolars (seven million Euro) of revenues, up 5.2 percent over the same 2001 period. During the same period, the Podcetrtek spa resort’s profits amounted to 221.7 million tolars (970,000 Euro), up 16.3 percent year-on-year, Slovenia Business Week said.

Higher confidence, tourism pushes down unemployment


The most recent report by American consulting firm Euroasia Group and the Lehman Brothers investment bank has revealed that the unemployment rate in Croatia, for the first time since gaining independence, declined in two consecutive months.

In addition, the report noted that the decrease in unemployment was recorded just as the peak summer tourist season was out, Bluebull reported. The firms made reference to a stronger influx of deposits in local banks (also at the end of the tourist season), which are interpreted as a result of good tourist business, including higher confidence in the country’s banking system. The report is in favour of government’s efforts to secure a new deal with the International Monetary Fund, as well as news that the deal would be used to support the macroeconomic policy rather than fund spending. Referring to the political and security situation, the report noted the government’s defensive position with regards to the right-wing and militarist lobby linked to the case of General Janko Bobetko, who has been indicted by the UN war crimes tribunal at The Hague. In particular, the report noted that the case continues to hold back the government’s relations with certain sections at both an international and domestic level.