Hi, this is Daniel Hornak in Bratislava and Daryna Krasnolutska in Kyiv. Welcome to our weekly newsletter on what’s shaping economics and investments from the Baltic Sea to the Balkans. You can subscribe here.

Fico’s Friends

There’s been plenty of talk in recent months about gas deliveries from Russia through Ukraine to the European Union. But the real nitty-gritty of negotiations has been shrouded in a bit of secrecy. Neither side has been willing to say much so as not to jeopardize any potential deal that might be reached by the end of the year.

Slovakia and Hungary want to keep supplies coming through Ukraine, as do companies in Austria and Italy, and officials have been trying to find ways to do that. Needless to say, it’s complicated. Kyiv rules out the transit of Russian gas, while Brussels is urging EU members to stop importing it by 2027. Proposals have included using intermediaries, alternative sources or even just calling it something else.

With the clock ticking, the veil dropped on Wednesday. Slovak Prime Minister Robert Fico lamented in front of lawmakers that his EU allies were deaf to demands to find a solution. If no deal is found, his country risks losing as much as €500 million ($525 million) in transit fees a year and may even be forced to pay more for gas from elsewhere, he said. “Are we just going to let that pipeline dry up?” said Fico. “In the name of what? Because you don’t like the Russians? Fine, I like them.”

Robert Fico, Slovakia's prime minister, arrives at an EU summit in Budapest on Nov. 8, 2024. Photographer: Akos Stiller/Bloomberg

The coming days will show whether his comments will help or hinder the Russia-friendly leader. He needs to get both the EU and Ukraine on board to back a solution to keep the gas flowing. While he’s been speaking favorably of Russia since he came back to power last year, this latest statement may prove too much.

There was one bit of good news, though. Hungarian Foreign Minister Peter Szijjarto said on Thursday the US granted an exemption for gas payments from its recently imposed sanctions on Gazprombank.

Around the Region

Czech Republic: The region is sidestepping a wave of interest rate cuts that’s spreading across major economies in anticipation of potential turmoil as Donald Trump takes up the US presidency again. The Czech central bank was the latest to leave borrowing costs unchanged this week. 

Ukraine: Trump said Kyiv needs to reach a deal to end the war with Russia and signaled he may push for a settlement that yields territory to Vladimir Putin.  Meanwhile, Russia accused Ukraine of organizing the assassination of one of its top generals in Moscow.

Regional: Countries along NATO’s eastern frontier have been sounding the alarm for years over war with Russia. Call it shadow or hybrid — or even terrorism — everything is now pointing to one in all but name.

Romania: The country’s political crisis deepened after the largest pro-European party withdrew from negotiations to form a governing coalition. Separately, the EU started an investigation of TikTok over suspicions it didn’t do enough to stop fake accounts and foreign powers from interfering in the presidential election.

Poland: The executive producer of CD Projekt’s The Witcher IV said the company is confident the latest iteration of the blockbuster video game will be a “great successor” to the last one, which went on to sell more than 50 million copies. 

Chart of the Week

No European Union leader is as close to Donald Trump as Viktor Orban, and investors in Hungary’s stock market appear to be relishing the return of the former US president to the White House. The thinking goes that the cozy ties between the two political bedfellows could lift Hungarian companies, especially those with ties to Russia, if Trump brokers an end to the war in Ukraine.

By the Numbers

• Polish power utility Tauron Polska Energia plans to spend 100 billion zloty ($25 billion) by 2035, mostly on its distribution network and renewables, as it ditches coal.
• Czechoslovak Group said the recent acquisition of several US ammunition plants for $2.2 billion would allow it to benefit from rising global defense spending while it explores further investment opportunities.
• Albanian Prime Minister  Edi Rama is optimistic his country can complete accession talks with the EU by 2027 and join the bloc by the end of the decade.
• Poland intervened in the butter market, selling an equivalent of 5 million sticks to try and curb a surge in prices that’s now getting political. 

Things to Watch

• Ukrainian state-run railway company Ukrzaliznytsia proposed delaying some interest payments after being hit by inflation and higher electricity and fuel costs. 
• Georgia picked former footballer Mikheil Kavelashvili of the ruling Georgian Dream party as its next president while protests continue over the government’s turn away from the West in favor of closer ties with Russia.
• Keith Kellogg, a retired general who is Trump’s special envoy for Ukraine and Russia, plans to visit Kyiv next month and would be open to meetings in Moscow if invited.

Final Thought

As we head into the festive season, authorities tend to be on the look out for any drunk drivers or unruly behavior. In Bulgaria, though, it’s lawmakers who are coming under scrutiny. The 240 members of parliament took a break from the country’s political crisis to discuss introducing blood tests for alcohol and drugs. They approved penalties for damaging parliamentary property after microphone wires in the chamber were torn off during recent crucial debates on coal-fired power plants. As one parliamentarian, Deyan Petkov, put it: “There are some doubts in Bulgarian society about the sobriety of certain lawmakers, and the way they behave.”

The Bulgarian national assembly in Sofia. Photographer: Michaela Vatcheva/Bloomberg

(This will be the last Eastern Europe Edition of 2024. We will be taking a short break and return on Jan. 10.)

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