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Southeast Europe: Weekly rundown

Southeast Europe: Weekly rundown Meeting between Croatian, Israeli government officials on F-16 deal Author: Croatian government

SOFIA (Bulgaria), January 11 (SeeNews) - Two separate deals for the purchase of US-made F-16 fighter jets - one of which was cancelled, while the other one moved a step closer to conclusion - were among the most interesting developments in Southeast Europe this week.

On Thursday, NATO-member Croatia said it will cancel its deal for the purchase of twelve F-16 from Israel after Israel failed to obtain US permission for the transaction. A day earlier Bulgaria's defence minister said the government in Sofia has asked parliament for a mandate to start talks with US for the acquisition of eight F-16.

In an unrelated development, the World Bank lifted its 2019 economic growth forecasts for five countries of Southeast Europe, while lowering predictions for three and leaving projections for two unchanged, compared with forecasts made in June.


CROATIA TO CANCEL F-16 DEAL WITH ISRAEL

Croatia will cancel the purchase from Israel of US-made F-16 fighter jets as Israel has failed to obtain US permission for the deal, the Croatian government said.

Croatia's prime minister Andrej Plenkovic received the director general of Israel's defence ministry, Udi Adam, who said that Israel has failed to obtain the US permission to sell F-16 Barak to Croatia, the government in Zagreb said in a tweet late on Thursday.

The Croatian government will therefore cancel the decision for the purchase of a combat aircraft, but remains committed to the continuation of the modernization of the country's Air Force, it added.

Last month, Israeli media reported that the US was blocking the $500 million (433.8 million euro) deal for the sale of 12 F-16 jets to Croatia. Washington believes that Israel acted unfairly as the F-16s are US-made and are not supposed to be sold to a third party without the US consent, Israeli TV broadcaster Channel 10 quoted officials as saying. According to those officials, the Trump administration was angry that Israel had added advanced electronic systems to the F-16s in order to sweeten its offer, which Croatia selected at an international tender that also attracted bids from Greece, Sweden and the United States.

In March, Croatia agreed to acquire 12 F-16 from Israel to replace its ageing fleet of Russian-made MiG-21 fighter jets. Croatia would pay the price in 10 equal annual instalments, Plenkovic said back then.


BULGARIAN GOVERNMENT SEEKS MANDATE TO START TALKS WITH US FOR F-16 ACQUISITION

Bulgaria's government has asked parliament for a mandate to start negotiations with the United States for acquisition of new F-16 fighter jets, defence minister Krasimir Karakachanov said on Wednesday. 

During the negotiation process in the past several months, we received certain assurances that the price will be corrected, Karakachanov said during a briefing following a government meeting, as seen in a video file published by local private broadcaster bTV.

Last month, the Bulgarian ministries of defence and economy proposed to the government to seek a mandate from parliament to start talks with the US for the acquisition of new fighter jets as part of the combat aircraft procurement process launched last year.

"The acquisition of new multipurpose fighters like the F-16V Block 70 from the US, equipped with the latest generation radar and weaponry, will significantly improve the combat capabilities of the Bulgarian Air Force," Karakachanov said back then.

In October, Bulgaria said that the US, Sweden and Italy have responded to its request for proposals for supply of up to 16 fighter jets to replace the ageing fleet of Russian-made combat aircraft of the Bulgarian Air Force. The US offered to supply new F-16 or F-18 jets, Saab offered to supply new Gripen C/D fighter jets, while Italy offered used Eurofighter aircraft. Subsequently, Saab improved its bid, offering to deliver 10 jets instead of the initially proposed eight.

In June, Bulgaria’s parliament approved a plan for the acquisition of NATO-compatible combat aircraft in two stages. The first stage envisages the purchase of no less than eight aircraft for an estimated total of some 1.8 billion levs ($1.1 billion/ 920.3 million euro).

NATO said last year that it expects Bulgaria's defence spending to rise to 1.56% of GDP in 2018, from 1.27% in 2017. Bulgaria's defence spending amounted to 1.26% of GDP in 2016. At the NATO summit in Wales in 2014, Bulgaria committed to a defence spending target of 2% of GDP, to be reached in the following 10 years.


WORLD BANK LIFTS 2019 GDP GROWTH FORECASTS FOR FIVE SEE COUNTRIES

The World Bank said it has lifted its 2019 economic growth forecasts for five countries of Southeast Europe, while lowering predictions for three and leaving projections for two unchanged, compared with its forecasts made in June.

Kosovo is expected to have the highest GDP growth rate in SEE region in 2019, of 4.5%, followed by Moldova with 3.8%, Albania 3.6% and Romania and Serbia with 3.5% each, the World Bank said in its January 2019 Global Economic Prospects report on Tuesday.

Croatia's economic growth rate is expected to be higher compared to the June projection - by 0.1 percentage point (p.p) at 2.8%. For Montenegro, the growth forecast was increased by 0.3 p.p to 2.8%, for Macedonia by 0.2 p.p to 2.9% and for Moldova by 0.1 p.p to 3.8%. The projection for Albania's economy is revised upwards by 0.1 p.p. from June.

The World Bank affirmed its 2019 economic projections for Bosnia and Herzegovina and Serbia at 3.4% and 3.5%, respectively, while the forecasts for Bulgaria, Kosovo and Romania were lowered to 3.1%, 4.5% and 3.5%, respectively.   

Global growth is expected to slow to 2.9% in 2019 from 4.2% in 2018, the bank noted in the report, adding that international trade and investment are moderating, trade tensions remain elevated, and financing conditions are tightening.

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