Serbia’s telecommunications sector is ripe for change, with new opportunities emerging. Navigating the competitive market, however, remains imperative for any new venture. Although most of the sector can be treated as competitive, there remains the problem of state-owned MTS: an entity whose development has been curtailed as a result of undue and opaque political influence.
Bulgaria’s energy sector is currently in the midst of a power struggle, with Prime Minister Boyko Borisov seeking to diminish the influence of independent businessmen with energy interests. One of the main consequences of this is that the sector is becoming increasingly politicised. Despite the involvement of international actors (Russia-EU), trends suggest that the sector will ultimately be shaped by internal power dynamics.
The Romanian maritime sector is characterised by its lack of an efficient and transparent legal framework, and the absence of public bodies to oversee and regulate who benefits from the sector. These legal gaps have been used by a group of Romanian Members of Parliament, ostensibly with the view to secure decision-making powers over the future development (and associated privatisation) of this sector.
Serbia’s information and communications technology (ICT) sector has been growing, and showing resilience in the face of economic crisis. Will the government’s newly found interest in this sector enhance opportunities, or potentially stymie growth? This depends on whether Belgrade shows support by initiating necessary reforms, or looks to exert undue influence by exposing it to an informal power play.
The energy sector in the TRNC is in need of investment, particularly to modernise its infrastructure. While the current government is losing political legitimacy, new political actors with strong ties to Ankara are likely to take control. If this happens, there is a high probability that they will increase their dealing with Turkey, potentially to the detriment of the TRNC’s own needs.
The privatisation of Bulgaria’s maritime sector was conducted in such a way that it enabled the country’s political elite to exert significant influence over what private actors were allowed to participate in privatisation tenders. A relatively opaque / ambiguous legal framework allegedly opened the doors to questionable dealings between the political and commercial elite, in exchange for state assets.
Elements of Romania’s media sector are actively being leveraged in the hands of an opaque network of state officials, businessmen, and secret services as an informal political and economic tool. Media outlets, for example, have been used to fulfil political agendas in exchange for state contracts; to the benefit of the most powerful family holdings in the country.
The Syrian refugee crisis is worsening the problem of child labour in Turkey. It is believed that as many as 1 million children in Turkey could be exposed to informal labour networks. Expanding concerns about child labour in Turkey are concerns for international investors, further enhancing the need to conduct integrity due diligence on supply chains and partners.
Fiat's 10-year contract with Serbia expires in December 2018, but will likely be extended. Serbia offers a favourable and profitable environment for Fiat; and will do so for as long as fully automated production is more expensive than human labour. Serbia’s sweatshop model of economic growth, however, only feeds the political elite, with low-cost manufacturing jobs contributing to poverty and a growing grey market for employment.
Serbia’s President Vučić is asserting his influence throughout the country’s institutions, including the military. The impact of the President’s visit to Moscow in December 2016 to discuss defence cooperation was, retrospectively, a move that reinforced his position as Serbia’s main guarantor of political neutrality. Vučić continues to balance relations with East and West.
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Etihad’s financial woes may complicate life for Air Serbia, with the Serbian government particularly placed in a precarious position if the Gulf airline withdraws from this venture. Facing additional pressure from regional low-cost carriers, the one airline that may eventually come out on top to dominate the regional aviation sector may be Lufthansa – but it may not risk doing so directly.
The failure of the Cyprus peace talks will have a direct impact on the development of the country’s gas market. Given the geographic location of Cyprus, and ongoing territorial disputes, its politics are colouring commercial negotiations in the gas sector, including those surrounding the Israeli Leviathan basin. This is inevitably creating an insecure investment environment.
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