Category: Investors Support

Bulgaria along with Romania faced a new rejection in the beginning of March, connected with their application to enter the Schengen zone. The two countries were postponed again from becoming part of the border free travelling area, after the justice and the home affairs ministers of several of the European Union member states agreed that the two countries are not yet ready for becoming part of the Schengen zone. Actually, most of the member states showed their support for the two countries from the Balkan Peninsula, however the powerful states of Finland, the Netherlands and Germany opposed. The two countries are meeting the technical criteria in order to become part of the Schengen zone, but their membership was postponed since the rest of the countries have certain doubts about the overall situation they are in.

The interior minister of Germany, Mr. Hans-Peter Friedrich, made a proposal according to which the access of the immigrants from Bulgaria and Romania should be restricted. His idea came from his concern that the social security system was used for many years already. All the other countries that are members of the Schengen zone however, stated that Germany should not restrict the right of access of the skilled workers to the job market. It is believed that the two countries will be accepted as members of the Schengen area at the end of this year or at some point next year.

The Schengen zone was formed in year 1985 with the aim to remove the internal borders between the member states and thus to encourage the free movement of people and their integration. The price for that Schengen freedom required many efforts and harmony among the member countries as far as visa issuance rules, coordination and cooperation among the police forces, and fight against organized crime were concerned. Once the Schengen zone was formed and later its members increased in number was formed the Schengen Information System, that helped the zone authorities in exchanging information about the movement of people and goods.

According to the member states of the Schengen zone, the two countries that were last accepted in the European Union – Bulgaria and Romania, still have issues to fight against. These include the problem with the organized crime and the problem with the corruption. The new report that the European Commission is expected to give to Sofia is expected in the end of this year. Until then, the country will go through elections and will have new government. At that time, a new report will also be issued from the Justice and Home Affairs Council. Bulgarians hope that the new government will have enough time to start its work and to give its signals to the European Union and the Schengen zone about its priorities and work plans. Eventually, the country hopes to get positive reports and to be accepted as a member state of the Schengen zone in the near future.

There are many reasons why Bulgaria has not been accepted to the Schengen space earlier in March. Some of the country’s critics say that Sofia’s politicians were incapable to convince their partners from the European Union that the country is ready to become one of them. Others think that Bulgaria is still incapable of joining the common border and has issues to deal with as far as organized crime, illegal immigration and corruption are concerned. At the same time, the Bulgarian politicians claim that the country has implemented all reforms required and that it was completely ready to be accepted in the Schengen zone in March.

The ministers of justice and home affairs of the EU have now postponed the membership of Bulgaria and Romania for indefinite period of time. The countries that were against the acceptance of the two new members are Germany and Finland, as well as The Netherlands. Their decision is based on the latest annual report for Bulgaria and Romania, according to which the two countries made progress but it was insufficient for them to be accepted in the security zone of Schengen. The zones on which Bulgaria should focus are the local judiciary system, the fight against the corruption in the administration, as well as the fight against the organized crime.

The finance ministers of Cyprus have plans to impose a limit on the cash withdrawals per week, according to BBC. The controls of the draft capital of Cyprus include export limits on Euro and a ban on the cashing of cheques. The deposits with sums higher than 100 000 Euros will find 40 % of the funds being turned into bank shares. According to the finance minister of Cyprus Michalis Sarris, the depositors that have less than 100 000 Euros in their accounts will not be affected by the new rules applied.

Yesterday, the chairman of Bank of Cyrus handed his resignation and was examined by the board of directors of the bank. At the same time, the Department of Work and Pensions in UK announced that the British pensions will no longer be paid in bank accounts in Cyprus and asked the expats living in Cyprus to open accounts in UK. In Greece, Piraeus Bank will acquire all deposits, branches and loans of Greek citizens that were owned by the Bank of Cyprus, Laiki Bank and Hellenic Bank. The finance minister of the European Union announced that he sees no signs of serious withdrawals of savings in the zone after the crisis in Cyprus.

The economy of Cyprus will be hit badly, but there are hopes that it will recover in a short period of time. Currently, the banks in Cyprus are closed and are expected to reopen on Thursday.

Kristalina Georgieva, the European Commissioner for International Cooperation, Humanitarian Aid and Crisis Response, who is also a Bulgarian has normal reaction about Sofia and Bulgaria being still not accepted in the Schengen zone. She gave an interview for Darik Radio. According to her, this is not the highest priority for the country at that moment and it is better not to do things in a rush. The European Commissioner accepts the fact that the member states of the European Community show no strong political willingness to allow entry of Bulgaria and Romania in the Schengen zone. Furthermore, she thinks that such decision could be taken in the next 12 or 24 months.

Kristalina Georgieva interprets the decision of the Schengen member states in two directions. The first one is related to Bulgaria’s willingness to solve it social problems, reduce the unemployment rate and make efforts towards economic growth. The second one is associated with the measures that the country has to take in order to improve the situation for the most affected and suffering social groups. As a European Commissioner, Kristalina Georgieva claims that the social priorities that have to be taken now include increase of the pensioners’ income and financial help for the families with small children. The country has to have stable economic and political situation and then make more efforts to enter the Schengen zone.

The banks in Cyprus will stay closed for two more days at least in order to prevent serious run in deposits. The local authorities hope that the system will start to function in a smooth manner again. Even when finally opened, the banks in Cyprus will be under strict control for keeping the financial system steady after the 10 billion Euro bailout. According to the Finance Minister of the country, the banks will have that control imposed for several weeks aiming to restrict the flow of money. The banks in Cyprus were closed due to an international rescue plan, according to which the two of the largest banks in the country need to be restructured. Their new policy will lead to serious losses for all the wealthy savers.

One of the banks to be restructured is the Bank of Cyprus, while the second one Laiki Bank has to be shut down. This was asked by the European Central Bank, the European Union and the International Monetary Fund in return of the bailout of 10 billion Euros. Those who have deposits in Laiki Bank will lose the savings above 100 000 Euros and those that have great sum s saved in Bank of Cyprus will be forced to contribute to the recapitalization of the bank. The crisis situation broke when the banking sector had grown eight times the country’s economy and the aim of the reforms now are for the banking sector in Cyprus to shrink. The banking sector in Bulgaria is stable, a fact that is backed with the new investors coming.

Bulgarian membership in the Schengen zone that requires no visas has been postponed for a certain period of time. This happened in the first week of March when the Interior Minister of Germany Hans Peter Friedrich expressed his concerns about the acceptance of Bulgaria and Sofia. According to him, the two countries, which are members of the European Union, are still not meeting the criteria in order to enter the passport free Schengen zone. He postponed the two countries entrance for the future, in case they manage to control the corruption levels and arrange for better functionality of the judicial system.

How can Sofia join the Schengen zone that was established in year 1985? This can happen in case all members of the European Union make a positive vote, in favor of the application. If one of the countries is against that acceptance like Germany in that particular case, then the membership of the country is postponed until the end of the year and even further. The Bulgarian authorities and the prior Interior Minister of Bulgaria criticized the delay, but confirmed that the country is ready for an open and constructive dialogue with Brussels. He expressed his hope that the progress reports for Bulgaria, prepared by the European Commission will be positive. Currently, the Schengen zone comprises of 22 countries from the European Union plus the countries of Switzerland and Liechtenstein, Norway and Iceland.

The Interior Minister of Germany, Hans Peter Friedrich blocked the accession of Bulgaria to the Schengen zone earlier in March. He expressed his concern in connection with the economic refugees and the prematurity of the two Balkan countries – Bulgaria and Romania to gain full membership in the Schengen zone. Bulgaria has put a lot of efforts into being accepted to the passport free and border free area of Schengen, but on 7th March its acceptance was postponed for an indefinite time.

At the same time, the Bulgarian Interior Minister at that time, Mr. Tsvetan Tsvetanov announced that his country meets the criteria to be accepted into the Schengen zone. The other members of the zone accept the fact that the country can secure technically the borders of the zone, but are still worried about the shortcomings of the Bulgarian judicial system. The members of the Schengen zone want to protect it and are ready to take all measures in order for it to remain credible. That is why they want to be absolutely sure when they allow Bulgaria and Romania to be part of the Schengen area. Then, if people would like to stay in another country of the European Union, they have to show that they have work or regular income they can rely on. The aim of all the member countries of the European union however, is for people to find good living conditions in their own country and not leave their homes.

Europe without borders – actually the Schengen zone means much more than that and this is the reason why all those countries including Bulgaria with its capital Sofia are so eager to enter. In fact, Bulgarian citizens can travel freely. Even so, since the country is not a member of the Schengen zone, they have no rights to work and study without additional permission. The European Union countries have signed an agreement in 2007, according to which the transitional period for entering the Schengen zone is the end of 2013. After that, Bulgarians will have the right to settle permanently in other countries of the European Union in case they have a job or are enlisted in a University. This however is currently not valid. Sofia is still outside the Schengen zone and will remain there for an indefinite period of time.

An interesting fact to be mentioned is that Bulgaria is already part of the Schengen area and became such as it entered the European Union in year 2007. Even so, the citizens in the country have been blocked from free movement. Bulgaria has increased the border checks with its neighboring countries that are not members of the European Union. Besides, the country is also using the Schengen Information System, which allows for police authorities in the European Union to track down the entries and exits of the country. Sofia also has marked great success in preventing traffic of people, smuggling and drug related crimes. Currently, the country has border controls and this will not change before Bulgaria is accepted in the Schengen zone.

The political leaders of Cyprus are trying to make a last minute deal in order to save the economy of the country. According to the information presented by the European Central Bank, it will keep the emergency aid planned for the banks in Cyprus until Monday, however after that it will cut them off unless the local government does not issue a rescue program. Thus, the bailout deal should be signed soon, as the Emergency Liquidity Assistance offered by the European Central Bank will be valid only until the beginning of next week. After that deadline, the assistance will be offered only if the solvency of the banks is secured.

According to the new plan that the government of Cyprus wants to impose, there still will be a 2 % one-time tax on all deposits up to 100 000 Euro and 5 % one-time tax on the other deposits above the named threshold. This new bailout plan came as the finance minister of Cyprus went to Russia in search of additional help. He took this step as many of the wealthiest people in Russia hold big deposits in the banks of Cyprus. Meanwhile, the banks in the country will remain closed until the end of the week, however the authorities have ordered all ATM machines to be regularly filled with cash.

The European Commission, the European Central Bank and the International Monetary Fund, as well as other European officials hope that Cyprus will soon reach a decision and get a financial lifeline, otherwise the damage to the economy of the country will be enormous.