Eastern Europe Edition
Hi, this is Jasmina Kuzmanovic in Zagreb and Andrea Dudik in Prague. Welcome to our weekly newsletter on what’s shaping economics and invest
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Hi, this is Jasmina Kuzmanovic in Zagreb and Andrea Dudik in Prague. Welcome to our weekly newsletter on what’s shaping economics and investments from the Baltic Sea to the Balkans. You can subscribe here.

Sun, Sea and Slogans

Croatia should be in its element. It’s the peak season for tourism, an industry that accounts for about a fifth of the economy. Foreign visitors are flocking to its beaches, islands and historic resorts to spend their euros. There was a 9% jump in arrivals in June alone, according to the latest statistics, with Germans driving the growth.

The 30-year journey from a war-torn state of former Yugoslavia to one of Europe’s hottest destinations, though, comes with baggage. Croatia is firmly ensconced as a member of the European Union and the euro single currency. Yet scratch beneath the veneer and there’s a lingering malaise.

As in other parts of Europe, the far right has gained ground, joining a coalition government as Prime Minister Andrej Plenkovic sought to stay in power. But nationalism in Croatia is more prominent in popular culture than at the ballot box, and the debate this summer is around what’s acceptable and, more importantly, what’s not.

It all stems from the popularity of Marko Perkovic, a singer known as Thompson after submachine gun he used during Croatia’s war of independence in the early 1990s. When performing his biggest hit, Thompson uses a slogan from the country’s fascist regime in World War II – the Croat equivalent of “Sieg Heil” in Nazi Germany. And it’s not like he represents the fringe of society: At his concert in Zagreb last month, half a million people bought tickets. There were 150,000 fans at his gig in a small town this week.

Croatia's nationalist singer Marko Perkovic Thompson. Photographer: Damir Sencar/AFP/Getty Images

As tourists mingle in beach bars and restaurants, politicians are arguing over whether a line has now been crossed in Croatia. Plenkovic says the slogan has a negative meaning for the victims of the fascist regime but a positive one for those who fought during the breakup of Yugoslavia. Others say once things are accepted as mainstream, it’s hard to go back.   

Around the Region

Czech Republic: Armored vehicle and ammunition maker Czechoslovak Group is considering an initial public offering, seeking a valuation of €30 billion ($34.9 billion) or more, according to people familiar with the matter.

Poland: The new energy minister said in an interview that he supports a moderate path to zeroing out emissions, allowing some coal-fired power plant to still be used in 2040.

Uzbekistan: The former Soviet state’s $1.7 billion national investment fund is preparing for a dual listing at home and potentially in London next year and has picked eight banks to handle the offering, the fund’s manager said in an interview in Bucharest.

Hungary: Gedeon Richter, the country’s biggest drugmaker, aims to clinch more deals like its partnership with AbbVie Inc. to expand in the US without being weighed down by import tariffs.

Poland: Karol Nawrocki, the nationalist outsider who scored a shock victory in June’s runoff for president, was inaugurated, setting up a battle with Prime Minister Donald Tusk’s pro-EU administration. 

Chart of the Week

Polish convenience store chain Zabka has been expanding rapidly. It plans to open another 1,300 outlets this year alone. Yet its shares have been laggards in Warsaw this year because of a mixed picture for the company. This week, though, they did some catching up after Zabka reported its latest results, with net income jumping 22% in the second quarter.

By the Numbers

Things to Watch

  • Presidents Vladimir Putin and Donald Trump will meet for summit talks, the Kremlin said, as the US pushes for an end to the war in Ukraine. Ukraine’s dollar bonds extended gains on the news.
  • A Moldovan court sentenced the head of the autonomous region of Gagauzia to seven years in prison over illegal party funding tied to a fugitive oligarch. The ruling comes just weeks before parliamentary elections.
  • Lithuania’s ruling party nominated Inga Ruginiene, a former trade union leader, to become the next prime minister after the collapse of the previous coalition government.

Final Thought

It’s almost 30 years since the peace accords officially ended the war in Bosnia, but tension has rarely gone away. Now it’s the latest chapter for Bosnian Serb leader Milorad Dodik, who wants to break away and form his own state. A court in Sarajevo upheld a ruling this week that Dodik needs to serve a year in prison and be banned from holding an office for six years. An election body then stripped him of the presidential mandate. It’s yet to be seen whether the decision will be enforced by the central authorities — and how his allies in Moscow and Belgrade would react.

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