This edition of State of the Union focuses on the continuing diplomatic détente between Turkey and Greece and the escalating domestic upheaval in Georgia.
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00:00Hello and welcome to State of the Union, I'm Stefan Grobe in Brussels.
00:10Just a year ago, a summit meeting of the leaders of Turkey and Greece would have created sensational
00:15news.
00:16But when President Recep Tayyip Erdogan hosted Prime Minister Kiryakos Mitsotakis in Ankara
00:22this week, it was almost a routine talk between neighbors.
00:27For over a year now, the world has been witnessing a five-month-old friendship initiative that
00:31was designed to put an end to decades of mutual animosity.
00:36Instead, the two NATO members are focused on trade, tourism, energy, and repairing cultural
00:42ties.
00:43Erdogan visited Athens in December, and the two countries have since maintained close
00:48high-level contacts, apparently with success.
00:53In the critical area of immigration, the cooperation between our two countries, and especially between
00:59the police and the port, is failing.
01:02In the face of illegal flows and in the face of reckless traffickers who take advantage
01:10of the pain of desperate people, this cooperation must continue and intensify.
01:18There are still areas where both sides have agreed to disagree, but it's good to see one
01:23old trouble spot in Europe sort of fading, while another trouble spot just around the
01:28corner was heating up big time this week.
01:31I'm talking about Georgia, where thousands of protesters rallied near the parliament
01:36building in Tbilisi, again, just hours after lawmakers gave the final approval to the controversial
01:42foreign influence law.
01:44A piece of legislation that could have been drafted in Moscow.
01:48They passed the law despite EU warnings that it would undermine Georgia's path to EU membership.
01:55The official reaction in Brussels was muted, revealing a sense of disappointment.
02:01I had a phone call a few days ago with the prime minister.
02:03I told him that I'm disappointed, and I sincerely hope that in Georgia they will find the way
02:09to stick to the rule of law principles, to democratic principles, and also to meet the
02:16expectations of the population.
02:18Maybe the government of Georgia should focus on real issues like the economy and not on
02:23unpopular stupid laws.
02:26This week, the European Bank for Reconstruction and Development released its latest economic
02:30outlook.
02:32The numbers for Georgia, which is part of the area where the EBRD operates, were rather
02:37sobering.
02:38In general, the forecast also contained some encouraging news.
02:43Joining me now is Beata Javorcik, chief economist of the European Bank for Reconstruction and
02:48Development.
02:49Welcome to the program.
02:50Always good to see you.
02:51Thank you for having me.
02:53So, your latest report is appropriately called Taming Inflation.
02:58And when I look at the numbers, inflation in the EBRD regions came down from a peak
03:03in October 22 of 17.5 percent to an average of 6.5 percent last March.
03:11Explain that number for us.
03:13What is behind such a huge drop?
03:16What has helped bring the inflation down were, to a large extent, the developments in
03:22international markets.
03:23We have seen a sharp drop in the prices of natural gas in Europe, decline in prices of
03:31agricultural commodities, and oil prices have remained moderate.
03:37But, of course, inflation in our regions of operations still remains above the level saw
03:46before the pandemic, as is the case in advanced economies.
03:50So, do you feel a sigh of relief regardless now?
03:54Or are there still important inflation risks remaining?
03:57Not all central bankers can consider their job done.
04:00If you look at cumulative inflation, that is, inflation since February 2022 up till
04:08now, it has exceeded 30 percent in several countries, notably in Egypt, in Turkey, in
04:17Hungary, and Kazakhstan, Moldova, and Ukraine.
04:20So that means that in the absence of wage increases, people in those countries would
04:26have lost a third of their purchasing power.
04:29Let's talk about the growth outlook in the EBRD's EU regions.
04:34Do you see positive signs going forward?
04:38This year is going to be much better than last year for the Eastern European EU member
04:45states. In particular, Poland and Croatia stand out with the expected growth of 3 percent.
04:52Hungary will do as well, too.
04:54We see real wages increasing.
04:58We see fiscal policy helping out.
05:01And the EU funding, the new generation EU, also stimulating economic activity.
05:08Well, I can't release you without a word on Ukraine.
05:12How is their economy doing in the third year of the war?
05:16The heavy bombings in the last two months mean that the ability of Ukraine to generate
05:26electricity has been severely diminished.
05:30Electricity production is at 40 percent of what it used to be before the bombings.
05:37And this capacity cannot be easily repaired.
05:42All right.
05:43Beata Jaworczyk, chief economist of the EBRD.
05:46Thanks for coming on the show today.
05:48Thank you for having me, Stefan.
05:50Looking for something fun to do over the weekend?
05:53How about this?
05:55Jumping from a helicopter at 3000 feet high, diving down to 35 meters above the River Thames
06:03and then soaring through London's Tower Bridge, only to rise up again to 80 meters,
06:09the height required to open the parachute before landing safely.
06:13A complex James Bond-like maneuver known among insiders as a flare.
06:18Well, two professional skydivers from Austria did it this week
06:23and described the experience as a dream come true.
06:27And this coming from veteran skydivers with more than 22,000 jumps under their belt.
06:33From takeoff to landing, the London wingsuit flight covered more than a kilometer
06:38and reached a top speed of almost 250 kilometers per hour.
06:43And it lasted 45 seconds.
06:46That might not be enough fun for an entire weekend, but it's a start.
06:51Just don't look down.
06:54That's it for this edition.
06:55I'm Stefan Grobe and thank you for watching.
06:57Have an excellent week.