Moscow generally refrained from exploiting ethnic problems in the Czech Republic. However, the position of the Roma minority was sometimes brought to attention by Russian officials and media to represent the Czech Republic as not democratic enough. Moscow has also expressed concern over alleged unfair treatment of ethnic Russians enforced by the Czech authorities.
According to Slovak government reports, Russian information agencies have hired members of the Slovak secret police in order to sabotage the expansion of NATO to the Czech Republic by organizing plots meant to exploit rivalries and to fuel doubts on the ability of the Czech Republic join NATO. According to the Czech counterintelligence service, international organized crime that acts in the country has mostly links with Russia. Czech intelligence noted a growing interest of Russian intelligence services for information on modern military equipment that NATO brings in the Czech Republic. Czech analysts have complained about the refusal of successive governments to reform the four information services of the country, indicating that some senior officials continue to cooperate with Moscow.
Moscow’s position became even harsher after Hungary has requested NATO membership. Russian propaganda attacks on Hungary were more moderate than those against Poland because the country does not occupy a strategically difficult position, as it is not so close to the CIS region. Moscow has not released any specific threat against Hungary as the country joined NATO. The comments of prime minister, Viktor Orban, in October 1999, regarding the possibility of allowing U.S. to place nuclear weapons in Hungary “in times of crisis” have outraged Russian officials and led to postponement of Prime Minister Kasyanov’s visit to Budapest.
Since the election of Putin, Moscow has tried to boost the sale of arms to former signatories of the Warsaw Pact and to regain some of the lost market due to Western intervention. However, Budapest has remained cautious about military dependence on Russia.
Russian companies have been trying to invest more and more in the Hungarian energy sector through privatization. Russian capital has increased its role in Hungary in the last decade. The Hungarian authorities have noted this tendency with some fear and are believed to be imposing restrictions.
Moscow has tried to discredit the Hungarian pro-Western and pro-NATO government, focusing on Roma issues, which they consider a more sensitive issue in Western capitals.
Russian propaganda strongly attacked Poland’s efforts to establish regional groupings with its post-soviet neighbors and the ones from Central Europe. Moscow feared that structures such as the Visegrad group would exclude Russia and attract CIS countries in the Western orbit. Moscow believes that Poland is its main regional competitors in exercising influence over the CIS countries.
Relations with Russia became even more strained after Poland’s accession to NATO in 1999. Kremlin was trying to demonstrate that the new members of NATO will adopt an attitude of opponents of Russia. Officials were complaining about NATO’s increased activity at the borders of Russia, including military flights over the Kaliningrad region of Russia.
Although Warsaw has focused much of its foreign trade to the West, it remains heavily dependent on Russia for energy supplies. Moscow thus uses its “energy diplomacy” to achieve political gains.
In a movement to ensure energy diversity and decrease dependence on Russia, in September 2001, Poland signed an agreement with Norway, although Norwegian gas suppliers prices were 30% higher than Russia.
Due to Poland’s ethnic homogeneity and the absence of any significant autonomist movements involving Russian-speaking population, there weren’t too many opportunities for Moscow to exploit the ethnic issue to its advantage.
Russian services have had too few opportunities to provoke ethnic, social, religious or regional unrest in Poland or to incite anti-government feelings. As one of the most homogeneous countries in Eastern Europe, with a reasonable attitude towards minority rights and a small number of ethnic Russians, Poland has escaped some of the complaints raised by Russia to the neighboring Baltic states. Therefore, there was little chance of manipulation by the Russians on these issues.
Moscow has tried hard to discredit the Polish authorities to disqualify the country’s entry into NATO. Russian officials also tried to show that Poland was not a serious partner for Western institutions telling the Polish secret services and other secret services in Central Europe continued to spy on Alliance.
Latvia, Estonia, Lithuania
Russian leaders did not believe that they can realistically integrate the three countries in the CIS or other supra-structure. They tried instead to place Estonia, Latvia and Lithuania in a “neutral zone”, undefined, between NATO and the CIS and between Central Europe and Russia, in this way, Western influences could be minimized. Russian officials have lanched many warnings in the 90s on the fact that admission of the Baltic countries in NATO would lead to interruption of relations between Moscow and NATO and would lead to a new era of conflict.
Moscow was vehemently opposed to Balkan states’s entry in NATO and warned that such a move would bring to power the hard-line politicians in Russia, and this would hasten the appearance of a conflict with the Alliance. Kremlin argued that the admission of the Baltic states would create a strong barrier against Russia and claimed to have a decisive word in the Baltic republics security policies.
Kremlin tried instead to isolate the three countries internationally, generating tensions within and between the Baltic states and other states to block their acceptance into NATO, specially since the good relations with neighbors were an important condition to become a member of the Alliance.Moscow was manipulating the minority issue to demonstrate that all three governments are unable to achieve European standards of minority protection and human rights.
Russian authorities threatened the Baltic States, supported the economic conflict and claimed that these states represented a springboard for a possible NATO attack against Russia. Some politicians asked to take military measures to force the three republics to comply, and Foreign Minister Primakov called for a revision of certain post-Soviet borders. When direct threats did not have the desired effect, Kremlin resorted to incentives.
At the Easter European leaders’ high level meeting in Vilnius in September 1997, Prime Minister Chernomyrdin proposed several confidence building measures, under the name of “the Baltic Programme”. This included proposals for unilateral security guarantees offered by Russia if Estonia, Latvia and Lithuania remained outside NATO and bilateral guarantees offered by Russia and NATO.
Moscow continued to work towards the disqualification of the Baltic states as viable candidate for the Alliance. They invented internal and external problems such as NATO leaders to consider that the accession of the Baltic states would be too risky, creating new problems to the organization.
Moscow was disrupting Baltic economies to gain political advantage. Each government has tried to steer the economy to the West and to limit dependence on Russia and its susceptibility to blackmail. Moscow has tried particularly to control power transmission means, this being profitable both financially and politically. There were also attempts to discredit the intelligence and security in the Baltic countries to disqualify them for joining NATO.
Moscow has tried to create differences between Baltic leaders claiming that the Estonian and Latvian businessmen are skeptical about the integration into NATO and would prefer to expand trade and political ties with Russia.
When Putin understood that NATO expansion can not be stopped, he changed his strategy, believing that acceptance of NATO membership for the Baltic States combined with a stronger expression of the views of Moscow in NATO deliberations, could weaken the Alliance and undermine the relevance of extending. Baltic officials that it’s important that all three Baltic countries should be included into NATO simultaneously. This was the only way that future conflicts with Moscow could be prevented regarding the NATO membership, the possibility of rivalry could be reduced and could provide a safe environment for economic development. Any delay in joining of any Baltic state would have allowed Russia to develop its international influence by obtaining a firmer control in strategic sectors of local economies.
Russia has had some disappointments in the policy of the Baltic countries. It failed to attract the three independent states into its own orbit of security and proved unable to prevent their political orientation to the West and establishing close relations with the United States.
With the outbreak of Yugoslav wars in the summer of 1991, Russian policy has oscillated between supporting the integrity of Yugoslavia and the cold relations with Milosevic, who had supported the coup attempt in Moscow in August 1991. The central goal of Russian diplomacy was the preservation of Yugoslavia and maintaining domination over Serbia, according to the Soviet Foreign Ministry before the Soviet collapse (position inherited by his successor Russian), an independent Yugoslavia representing “an important element of stability in the Balkans and throughout Europe”.
In turn, Belgrade considered Russia as a useful ally because of Moscow’s veto in the UN Security Council during Belgrade’s attempts to create Greater Serbia. Yeltsin recognized the independence of Slovenia in February 1992 after it became clear that socialist Yugoslavia died.
Yet, in the early stages of the Bosnian war in 1992, Moscow strongly supporter Serbia, which coincided with the affirmation of a more aggressive foreign policy line. During the visit Foreign Minister Ivanov in Ljubljana, several agreements have been finalized and was stressed that the economic cooperation was steadily improving. Slovenian businessmen have made their presence felt in Russia more than ever, as the volume of investments increased. Slovenia and Russia plan to expand trade from the current $ 600 million annually, to at least one billion dollars by 2006. Discussions were held also around Russia’s debt to ex-Yugoslav countries. Slovenia should receive 207 million dollars of the total of 1.29 billion that Russia owes the successor states of Yugoslavia.
In Slovenia, Russia had few opportunities to exploit ethnic differences, as the country is predominantly homogeneous and there are no territorial claims from neighbors. Moscow had few opportunities to influence political processes in Slovenia. Moreover, most parties in Slovenia were prominent anti-Yugoslav and pro independence – positions that were contrary to Kremlin policy. It is believed that Moscow was clearly defending Yugoslav and Serbian causes. Still, Moscow is counting on the fact that it could enter in Zagreb on long term by economic cooperation and investment.
Slovakia from Merciar’s time became the only Central European state to accept the “Kvitinski doctrine” and signed a fundamental treaty with Russia. The doctrine was named after the Soviet deputy foreign minister, Yulia Kviţinski, who led negotiations in 1991 for bilateral treaties with all countries of the former Warsaw Pact, incorporating security clauses that deny them the right to establish “hostile alliances.”
Exclusion of Slovakia from the first round of NATO expansion was considered a diplomatic success of Moscow. As a result of NATO’s expansion, Moscow launched a warning on creating a multi-state alliance in the region, which could exclude Russia from any of its traditional “spheres of influence”. With the election of a democratic government in Bratislava in September 1998, Moscow’s influence began to be closely investigated. Putin administration also had to accept the invitation to join NATO addressed to Slovakia in November 2002 at the Prague summit.
Moscow did not need too many propaganda attacks and disinformation campaigns against Meciar regime, which was perceived as a valuable outpost of Russian interests in the middle of a Western-oriented region. Criticism against the democratic coalition who was ruling the country after the elections in September 1998 had become a common ground and Russian secret services bribed or blackmailed editors and journalists to send materials to the benefit of Moscow. There were suspicions in Bratislava that some negative reports on government security agencies were created and spread by Russian intelligence. Among them were allegations of lack of credibility of the Slovak security services and illegal sales of arms to regimes internationally sanctioned.
NATO leaders had expressed concerns over Slovak Intelligence Service (SIS) being involved in arms trafficking, working with Russian intelligence services, tapping journalist’s phones illegally and engaged in campaigns of denigration of some politicians, which could affect the national security of the country and the Alliance in general. NATO Secretary General Lord Robertson said that Bratislava has to convince the Alliance that their security bodies are to be trusted with the custody of classified information and that they have a credible and independent oversight of security.
The Slovak authorities have harshly criticized the reports according to which the SIS situation was raising serious doubts about the country’s ability to integrate into NATO and the EU. There were suspicions that the reports were exaggerated and falsified by activists associated with Meciar, which kept active links with Russian intelligence services, in a deliberate campaign of denigration of the government.
Russia believes that the Black Sea states, Bulgaria and Romania, have strategic importance for several reasons. First, their control can help increase Russian influence in southeastern Europe, while the Black Sea itself is considered a zone of Russian domination, secondly, they form a bond of energy and infrastructure between Europe and Caucasian and Caspian regions. Thirdly, Bulgaria is seen as a historical ally that can help restore Russia’s advantage. Traditionally, Russia has sought to keep open the Bosporus straits between the Black Sea and the Mediterranean for its navy and raw materials. This was done in the late nineteenth century at the expense of all countries in the region, including Bulgaria and Serbia, who have become Russian quasi-protectorates. Today, Russia’s strategic ambitions are focused primarily on the impending flow of Russian energy supplies to the West, but not necessarily through the Bosphorus. Moscow intends to provide alternative routes through the Balkans, as a shield against potential bottlenecks in Turkey.
Much of the 90s, Bulgarian Socialists remained closely tied to Russia in December 1994, when they returned to power, Russia’s influence grew and it considered Sofia as an opponent of NATO’s expansion. During a visit to Sofia in March 1996, Yeltsin said that Bulgaria is the only Eastern European country to become a member of the Russian community. In March 1996, Duma’s President, Gennady Selezniov said that Russia and Bulgaria share a common strategic objective and supported Bulgaria’s neutrality, In contrast, the Union of Democratic Forces (UDF) who was in opposition was perceived as a dangerous element, which could lead the country closer to NATO. UDF’s election victory in April 1997 was seen by the Kremlin as a major obstacle, as the new Bulgarian government fully embraced the possibility of entering NATO. Moscow tried to divide the Union, seeking to corrupt officials and lawmakers with business proposals. It invested large sums of money to undermine the government, between 1997 and 2001. Resources were allocated to the media and several political parties to discredit the UDF and to promote the Socialists, who were more reliable. Pro-Russian lobby of the Bulgarian Socialist Party campaigned on behalf of Russian economic interests against Bulgaria’s accession to NATO.
Russia was determined to use Bulgaria as a strategic outpost to penetrate the region, based on cultural and historical ties with Russia and the country’s geostrategic position. Disintegration of the Soviet bloc questioned the manner in which Sophia could to protect the independence and promote economic development while maintaining balanced relations with Moscow. Russia continued to show a superiority complex towards small Slavic states and expected that Bulgaria would remain part of post-sovietic political, economical and security space. Its expectations were deceived in April 1997, when Bulgaria elected a reformist pro-NATO government and its progress towards entry into NATO generated tensions with Moscow.
When Russia realized that – in terms of not allowing Bulgaria to NATO, the stakes were lost, there was a new facet of the “Slavic-Orthodox” construct, some Russian commentators claiming that the Bulgarians, in fact, were not entirely Slav. The intention was to maintain the illusion that NATO propaganda is essentially a Catholic-Protestant organization, aiming against the East Slavic world.
Moscow consistently opposed the accession of Bulgaria to NATO, but failed to deflect Sofia’s application for membership, however, the Russian secret services engaged in a campaign to discredit the Bulgarian government by launching rumors which have circulated widely in Bulgaria, that the new prime minister, Simeon Saxe Coburg Gotha, was a puppet for the Russian mafia. Also, Moscow claimed that the United States forced Bulgaria to join NATO and pressured Sofia to weaken its relations with Russia.
There was no direct military threat from Russia against Bulgaria, but Moscow has regularly expressed dissatisfaction towards Bulgaria’s moves closer to NATO and Washington.
At the end of NATO war in Kosovo, Bulgaria refused to grant overflight rights to Russia in order to position troops in the province, until agreement was reached between NATO and Russia for a unified command of the peacekeeping forces. Yeltsin’s deputy, Andranik Migranian, described this decision as a hostile act of Sofia that “will enhance anti-Bulgarian feelings in Russia” and which may affect economic relations”.
Bulgaria’s decision to join NATO sparked Moscow’s officials protests. In August 2000, Foreign Minister accused Bulgaria of establishing excessively close relationships with NATO, warning that it is detrimental to the country’s traditional ties with Russia. A smoldering conflict between Moscow and Sofia is on planning the opening of U.S. bases and military bases in Bulgaria. Setting up of bases was welcomed by the Bulgarian authorities who saw it as a means to strengthen ties with Washington and bringing economic benefits to the country. Kremlin signaled Sofia about its strong opposition towards this initiative and asked to participate in negotiations on the projected bases.
The ethnic issue occupied a marginal place in Russian policy towards Bulgaria. Otherwise would have been shocking that in the name of “Slavic solidarity”, Moscow to instigate a conflict or to accuse Sofia of discrimination against its Muslim communities (Turkish, Roma, pomaka), which forms most of the country’s minorities.
Some Bulgarian companies have been involved in scandals involving the export of arms to dubious regimes, including equipment that could already be used by governments in the Middle East. Such a scandal involving spare parts for armored personnel carriers for Syria, was presented in the press on the eve of NATO Summit in Prague in November 2002.
Romania initially accepted the “Kviţinski doctrine” proposed by Moscow on the eve of the Soviet collapse. At the negotiations on the bilateral treaty, a clause was inserted by which both parties were denied entry into any military alliance perceived as hostile by any of the signatories. Following the disintegration of the Soviet Union, the treaty remained in Bucharest unratified and, to the disappointment of Kremlin, Romania started to adopt a more open pro-NATO position. Although there was no direct military threat against the country, it was clear that Russia was strongly opposed to foreign and security policies of Bucharest.
The persistence of the political crisis in the neighboring country of Moldova, was manipulated by Moscow to put in a negative light Romania’s foreign policy. The maneuver became clear in February 2002, as the conflict between the government and protesters was getting stronger in Chisinau. There were demonstrations organized by the opposition movement against the forced introduction of Russian as official language by the Moldovan Communist administration. However, Russian officials have presented demonstrations as a Romanian provocationt, aimed at the annexation of Moldova.
Romanian authorities have accused Moscow of maintaining the crisis in a fragile state, in order to break the pro-Romanian block, to have a more subordinate Moldova and in order to discredit the government in Bucharest, in the manner well known Russian officials have launched libel to the foreign policy of Romania and questioned Bucharest ‘s credibility as a potential ally of NATO. Communist authorities in Chisinau, with close links to Moscow, in turn inflamed speculation that Bucharest would promote a “revenge” against the Republic of Moldova if they were admitted to NATO.
In September 2003, after Romania received the green light for NATO membership, conflict broke out on the need for parliamentary oversight of intelligence. Western agencies have pressured the Romanian commissioners to clean the data network by eliminating former members of the Securitate (Ceausescu’s secret police). Western intelligence services continue to be concerned about possible links between the former communist intelligence agents and Russian services. Washington demands a greater civilian control of intelligence from all invitees to join the NATO and transparency of their budgets.
Diplomatic relations between Albania and the Soviet Union were established in July 1999 after nearly thirty years of its deterioration by the regime of Enver Hoxha in Tirana. Relationship between the two countries remained cold throughout the ’90s, primarily because of the Balkan crisis. Russian authorities did not want to sacrifice good relations with Belgrade to improve those with Tirana. The conflict in Kosovo has strained relations, following the letter sent by Prime Minister Primakov to Albanian Prime Minister, in which he accused Tirana of exacerbating the crisis and pressed the government to eliminate “Albanian terrorism” in Kosovo. Albanian authorities have sent a harsh response to Kremlin’s allegations.
Russia was desperately seeking to have more legitimacy and a stronger voice in the regional policy. Russian officials claimed that NATO tacitly supports the Albanian “ethno-terrorists” in Kosovo in its war against Belgrade because their goals coincide. NATO’s intervention was seen as a way to reduce Russian influence by marginalizing the UN Security Council. Kremlin felt entitled to criticize NATO’s expansion, which coincided with NATO’s offensive missions that could set a precedent for operations near Russia’s borders.
Despite its criticism against U.S. unilateralism, Moscow was the first country to send troops into Kosovo without having UN approval first, in a movement designed to outrun NATO. Russian authorities have urged Tirana to accept a Russian military presence in Kosovo. The belligerent attitude of Kremlin during the NATO campaign was meant to gain a better bargaining position after the war was over.
Moscow’s proposals for the post-conflict period, to create a new Balkan “collective security system”, were received in Tirana as a renewed attempt to regain regional influence and weaken the U.S. position. Albanian authorities have revealed that Kremlin’s proposed security system was designed so as to bypass NATO and to include countries such as Serbia, who did not even participate in the NATO PflP program.
Since NATO’s intervention in Kosovo, Russian officials have described the Albanian nation as a major threat to stability in the Balkans.The Russian state propaganda claimed that all conflicts in Southeastern Europe are deliberately provoked to justify the expansion of NATO and its missions “in the outside area”, proving to be unable to recognize the Albanian ethnic cleansing of Kosovo by Serbian security forces. However, mass flight of hundreds of thousands of residents was described as the consequence rather than cause of NATO’s campaign.
Russian politicians have warned that Albanians are incapable of democratic government and are fundamentally violent. As proof, they emphasized the unstable developments in Albania. They claimed that the Albanian state generates regional instability, undermining the European expansion process , that it plays the role an intermediary for illegal materials and provides an opening for Islamic fundamentalist forces. Albania was denounced as a training base and transit point for terrorists.
Albania avoided to depend on the Russian energy, trade and market. However, Russia intends to include Albania in its increasing energy network across Europe.
Moscow had few opportunities to use social manipulation in Albania or Kosovo, in the middle of an Albanian majority population, where Russia exercises little influence. However, Albanian analysts believed that Serbian secret services, with the involvement of Russia, are active in both countries to generate social tensions and instability. Not having strong ties with major political forces in Tirana or Pristina, and no influence on them, Moscow failed to promote extremist political parties which could have challenged the popularity of pro-Western governments.
Constant presence of organized crime and corruption at high level in the Balkans gave Moscow solid grounds to insist at home on the anti-Albanian and anti-Kosovo message. Albania is regularly described as a regional center of crime, this leading to diplomatic incidents.
Albania’s close relationship with NATO and the United States were additional reasons for espionage by Russian agencies in Tirana. Similarly, Kosovo, a region where NATO and U.S. presence was significant, has become fertile ground for information-gathering for the Russian military and civilian intelligence units.
Former Yugoslav Republic of Macedonia
In 1992, President Yeltsin recognized the independence of Macedonia. It was a difficult decision because by doing so he risked to alienate the Orthodox nationalist bloc that opposed the disintegration of Yugoslavia and was in favor of Serbia in all regional conflicts. Russia’s aim was to build a future alliance with Macedonia and draw the country closer to the pro-Russian Serbia. Several incidents, including Albanian insurgency in 2001 and Western pressure on the government in Skopje to reach an agreement with leaders of the Albanian minority, represented propitious moments for Russian diplomacy to intervene. Moscow posed into champion of the cause of the Macedonian state, arguing that Albanians intend to divide the country.
Russian authorities have described the ethnic tensions in Macedonia as consequences of “Albanian terrorism” and expansionist tendencies coming from Kosovo. Officials warned that as Kosovo region could be dismantled and taken away from Serbia, similarly, parts of Macedonia may also be deployed. In this way, they managed to gain the trust of the government in Skopje.
Georgia and Ukraine
Russia is pressuring Georgia, threatening that if it becomes a NATO member, it may lose the two pro-Russian breakaway territories, South Ossetia and Abkhazia, which Russia could recognize as independent states.
Regarding Ukraine, Russia believes that adherence to NATO would destabilize the region and could lead to a division of Europe.
Concluding, even if this process is viewed with skepticism by Russia, which still sees the process of expansion as the main threat to its security, it must understand that for a global security it is required a good relationship with NATO and together to promote and to build this relationship.
Manufactured goods and industry: a symbol of German decline
German industrial power and quality levels became a national symbol in the latter part of the 20th century, and to some extent the lifeboat of post-war reconstruction. Even throughout the industrial rise of Asia at the end of the century, the German island remained sanctuarize from the competitive attacks of Eastern developing countries. But several German industries have been increasingly struggling in the past decade and gasping for air. Is Germany at the end of its prosperity cycle, for having rested on its laurels?
Germany, along with its wartime Japanese ally, impressed the world with its rise from its ashes in the latter half of the 20th century. Starting with the Marshall plan quickly followed by self-standing growth, Germany speedily re-built its industrial capacity, and its reputation for top-notch quality. As soon as in the 1960s, German brands invaded the global market with their sturdy reputation preceding them: if the product said “Made in Germany” then the customer could feel sure there was nothing better on the market. At the end of the century, a large share of the top global engineering segment was German: BMW, Bosch, Rheinmetall, Merck, the list is endless. Economic historian Werner Abelshauer describes  how the label “made in Germany” became a symbol of quality: “The label “Made in Germany” ultimately developed into a sign of quality, though it took a while.” But the era during which Germany levitated above the rest of the industrial world is coming to an end. While Germany remained unharmed by Asian competition for longer than its neighbors, it is now fighting on a level field with all other manufacturers in the field, and worse: it’s not doing all that well. Economic reporter Chris Papadopoullos placed  the start of the decline during the year 2015: “Total production, which includes construction, manufacturing and mining, dipped 1.2 per cent in August compared with July, German statistical office Destatis said. The production of capital goods fell 2.1 per cent while consumer goods dipped 0.4 per cent. Construction and energy output also posted declines “.
Of course, the Volkswagen scandal caused a major dent in the image of industrial Germany. Consulting group ALVA published an extensive study of the post-scandal consequences on the image of Volkswagen and German quality altogether, and wrote : “After the emissions scandal revelations, we can see a very different picture, with all Advocacy drivers having moved into negative territory to a greater or lesser extent. This is indicative of a reverse halo effect in which a negative emotional response to a company due to an erosion of trust spills over and clouds rational judgement of all of its traits.” Until then, German car manufacturers had been above suspicion, thanks to their reputation for industrial quality and business performance: when one is the best, there is no need to cheat. Through the fraudulent emissions revelations, Volkswagen, one of Germany’s flagships, showed that “Made in Germany” wasn’t all it was cracked up to be, and that they had flown too high on borrowed wings. The scandal shed doubt over other German flagships in its wake, as reported  by automotive journalist James Mills: “German media allege that US authorities have discovered that Daimler, parent of Mercedes, developed software for its diesel-powered vehicles that would shut down vital emissions equipment after driving just a short distance. Daimler is reported to have come up with programs that would shut down certain functions of the selective catalytic reduction filter after just 16g/km of NOx is admitted.” And the damage extended beyond the automobile world, into the whole industry.
Of course, if the problem were limited to the automobile world, Germany could survive on the others. But the slipping in industrial standards, the resulting loss of performance, and finally the need to resort to unsavory business practices to survive, seems to have contaminated all fields of the German industrial apparatus. German shipbuilder TKMS recently illustrated the downfall: after decades of occupying high grounds on the submarine market, the engineering firm is facing such a severe string of problems that it is facing being sold off entirely and scrapped from the national heritage. After losing a major submarine contract in Australia, it delivered a few corvettes to the German Navy, which simply refused them on the dock, due to quality standards being overstepped. Wall Street Journal William Wilkes reported : “Germany’s naval brass in 2005 dreamed up a warship that could ferry marines into combat anywhere in the world, go up against enemy ships and stay away from home ports for two years with a crew half the size of its predecessor’s. First delivered for sea trials in 2016 after a series of delays, the 7,000-ton Baden-Württemberg F125 frigate was determined last month to have an unexpected design flaw: It doesn’t really work.” Germany’s submarine fleet, also built by the same shipbuilder, is currently completely out of order . In desperate need for new contracts, it resorted to bribing officials, resulting in a political and economic quagmire in Israel. In an attempt to secure a submarine purchasing contract in Tel-Aviv, TKMS allegedly transferred over 10 million dollars through shell companies to a top government Israeli official. News Site Haaretz  reports: “At least ten high-powered individuals have been identified as involved in the scandal, including very close associates of Prime Minister Benjamin Netanyahu. A multimillion dollar submarine deal with German shipbuilder ThyssenKrupp is the focus of a police investigation, which is probing possible wrongdoing involving Netanyahu’s personal lawyer and German shipbuilder ThyssenKrupp’s local representative.” For weathered investors, this time in which German manufacturers need to resort to cheating to make up for their slipping industrial standards is something completely new, and in some ways an earthquake. As a result, investments are scarce for start-ups , as well as for established businesses .
Germany’s downfall in the industrial world isn’t taken lightly by political forces, and the economic problem is turning into a political one, with worker unions stepping up their criticism of management, and politicians scrambling to stop the nosedive. Angela Merkel has been urgently addressing the problem, but so far too little or no avail. “Angela Merkel champions Industry 4.0, urging investment in new technology. German business isn’t heeding the call”, says Politico . Unlike Angela Merkel, many in the country haven’t figured out that Germany had slipped from one industrial model to another: initially known for the superb quality of its products, it was caught up quickly by its direct competitors: United Kingdom, France, Japan and the United States in particular. The core of German’s added value today lies mainly in the machine-tools and high-tech subsystems of German equipment-makers. But as a whole, Germany no longer has the capacity to integrate large and complex systems such as aircrafts, frigates or new-generation submarines.
Hungary And Poland To Lose Up To 25% Allocation Of EU Funds
Hungary and Poland are set to be hit with new cuts in cohesion support after EU commission proposed new radical changes. This came to light after a series of propositions were published recently by the EU executive. Eastern European countries will be hard hit by the propositions, but more impact will be felt in Hungary and Poland.
The changes come in light of the immigration policies that certain countries have chosen to adopt. The two most affected countries will lose nearly 25% in cuts due to their problematic policies. The repercussions of the cuts could be felt very soon especially if the Eastern European countries decide to take on Western Europe.
Even though the commission has maintained that the new changes are not meant to be punishment for inconsistency and criticism, there is a general feeling that the countries will not take the changes well. The commission also argued that there is no need to compare the allocations between EU member states as each country has their own share of prosperity.
The proposed changes will also affect more countries in Eastern Europe including Lithuania, Czech Republic, Slovakia, and Malta. Germany will also get a reduction in the allocation to the tune of 20%. There are some countries however that will get a raise in their allocation including Greece, Romania, Bulgaria, and Italy.
The EU commission, through its commissioner for regional development, Corina Cretu, says that the recent changes have no political bearing behind them.
How the commission arrived at the figures
In previous years, the commission had an established formula for calculating the allocation of funds. This year though, it seems like there was a break from tradition since the calculation method was visibly adjusted. The GDP would be used to determine prosperity in the region during the past, for instance. This criterion seems to have been adjusted in addition to the inclusion of other factors like climate, education levels, employment levels, and of course the attitude of the countries towards immigrants.
It is yet not clear how these changes will affect the forex market in Europe. What is clear though is that the aftermaths of major decisions in recent years have often caused some disturbances in the stocks and forex markets. At times like these, stock and forex traders need to be on the lookout for any major breaking news. Admiralmarkets.pl suggests using the current forex and stock platforms to get market feeds in real-time.
The current feeling from the Eastern European countries is that the commission is finding ways of diverting money from the region to other regions that have faced challenges in recent years. The southern part of Europe has for instance been in the red for a couple of years now. The crisis in Greece and Spain is yet to completely settle. The sentiments of Eastern Europe do not seem to bother the commission, however. The commission argues that these countries have seen major growth in recent years and that they would even handle stiffer cuts. This, the commission argues, would especially be true if issues like GDP per capita were to be considered.
EU officials have spent much of the time explaining how their recent propositions are in no way related to the crisis in the south. Instead, the commission has used every opportunity to highlight the changes in GDP as the key reasons for the allocation cuts. It is indeed easy to find reason in this rationale when you analyze the economies of Eastern European countries.
Poland has for instance seen a lot of positive growth in the past few years. In 2017, the economy grew by 4.6%. This growth came in the backdrop of a similarly strong growth the previous year where the GDP growth was recorded as having been 3%. The forecasts for this year do not look bad either. The GDP is expected to grow by at least 4.3% as per what the commission has established on its forecasts. The growth pattern in Hungary was also comparable, being 3.3% in 2016, 3.45% in 2017 and with a projected growth of 4% year.
Looking south, the economy of Italy recorded growths of 0.9% and 1.5% in 2016 and 2017 respectively. The forecast does not look any different also as a projected growth of 1.5% is expected. In order to argue their case, the commission argued the case of Portugal, which is still struggling but which got some cuts due to its strong performance recently.
Hungary Economy: Population, GDP, Inflation, Business, Trade
The Hungarian economy is ranked as the 55th freest according to 2018 statistics. This economy has undergone a lot of transformation and it has particularly improved in the areas of the judiciary, labor freedom and investment. There are some realms however that have not seen great improvements especially in the areas of business freedom, government integrity, and property rights. In overall, Hungary is below average in most metrics in Europe compared to other peers in the region. The country is also just above the world average on the global scale.
Looking at its recent past, this country has seen a bit of relapse into some laws that were previously abandoned. The country has definitely seen much freer and liberal laws in recent years just before the government began to intervene in the areas of policy. Much of the changes over the years have been instituted to support economic growth and to balance out the budget while steering clear of areas that might cause conflict with the European Union. There are many targets that the government has including reducing public debt. It plans to achieve all of them by taking an active role and instituting sectoral laws.
The history of Hungary is long and colorful. It was once part of the communist realm until 1990 when it became completely independent. The country is currently a member of NATO having been in the organization since 1999. When the EU was formed, Hungary was not among the founding members and only joined the organization in 2004. There have been numerous economic reforms in the last decade and today, the economy is supported by strong local demand as well as exports. In recent years, things have been looking very optimistic for the country. The construction industry has boomed and there is a hands-on approach by the government on economic matters. The unemployment rate in the country is low.
Despite these improvements, there are still some challenges that face the government. It is for instance not as open as it ought to be and the judiciary is weak and subject to government interference. The policies surrounding land tenure are pretty straightforward and the government keeps updated records. Because of its somewhat domineering government and a weak judiciary, there are always concerns about corruption. The business sector is thus highly affected by the apparent indifference in the government towards corruption. A lot more needs to be done by the government to deal with prominent figures who have been a menace to business.
Moving on to the financial sector, there is a generally fair support by the government to the financial markets. The tax for corporates is maintained at 19% and tax for individuals is at 15%. The stock market is pretty vibrant with the Budapest SE index enjoying some good figures in recent years. Forex traders can do many things in this country even though the market is not as developed especially compared to the West. Forex trading is supported a lot and there are dedicated providers that allow Hungarians to access tens of thousands of markets.
As a country that is still developing many sectors, Hungary has a government that has a direct oversight over some sectors. You will thus often find direct government support for some industries. There are some sectors where there is not enough manpower. The labor regulations are somewhat basic which makes mobility a little difficult. Most of the product prices are market-determined but some goods’ prices are regulated by the government. Some of the areas in which the government has a hand on the prices include the markets of pharmaceuticals, tobacco, digital money, some machinery and electronic appliances and telecommunication products.
The health of the economy is definitely good considering that the trading industry is pretty vibrant. Hungary relies a lot on both exporting and importing goods. The total value of goods that either leave or enter the country comprises of up to 175% of the GDP. There are no strict tariff regulations and there is a general preservation of a 1.6% tariff rate. While there is much more government presence in many areas of the economy, the impact is not too big to disrupt economic activities. The financial sector is still in its formative years and it will take sometime before the banks get the necessary regulatory policy that supports growth.
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