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Fears grow for independence of local media in Poland

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When Krzysztof Zyzik first heard rumours that Poland’s state-controlled oil refiner PKN Orlen was poised to buy the local paper where he has worked for 27 years, he thought they were just an attempt to intimidate his staff.

“For the five years that Law and Justice have ruled, we have been quite consistently hated by the people in power . . . so we treated this initial information as an element of pressure aimed at sparking auto-censorship among our journalists,” the editor-in-chief of NTO, a regional news group from Opole in southern Poland, told the Financial Times.

When the transaction was actually announced, “the mood was terrible. It was obvious that an important chapter in our lives, which is simply called journalistic freedom, is ending.”

The sale of NTO is part of a bigger deal that has sparked concern for media freedom in the EU’s fifth-biggest state by population. Under the agreement struck last week, Orlen will buy the local media group Polska Press from its German owner, media group Verlagsgruppe Passau. When the deal is completed next year, Orlen, run by a close ally of Law and Justice, will control 20 of Poland’s 24 regional newspapers and more than 120 local magazines.

Orlen said the point of the deal was to “strengthen its retail sales, including non-fuel sales”, and that access to Polska Press’s 17.4m users would improve its big data tools and win new clients. However, journalists are deeply sceptical.

Daniel Obajtek, chief executive of PKN Orlen © Michal Fludra/NurPhoto via Getty

Law and Justice has never made any secret of its desire to “repolonise” Poland’s private media, in which they claim foreign owners have too much sway. Yet many journalists fear this will simply lead to private groups being reduced to government mouthpieces like state broadcaster TVP, which combines pro-government propaganda with relentless attacks on Law and Justice’s opponents.

“So far nothing has happened. It is a period of suspension. But everyone is worried about a repeat of the takeover of the public media, TVP, which in less than a year became a propaganda machine on a scale which had not be seen in Poland since communist times,” said Witold Glowacki, a journalist at Polska Times, a paper owned by Polska Press.

“This is the only model by which the ruling camp has showed its thinking about the media. There is no other point of reference or comparison.”

Orlen insists this is not the case and that there will be no interference in newsrooms. When the group announced the deal last week, it claimed that the transaction was part of a “global trend” in which companies created their own “communication platforms as a support for their business activities and for reaching new clients”, citing Amazon boss Jeff Bezos’s purchase of the Washington Post as one example.

Critics of the deal dismiss this comparison as ludicrous, pointing out that Mr Bezos is not a state-controlled company. “The comparison is not Amazon but Gazprom,” said Mr Zyzik, referring to Russia’s state-run gas giant, which bought up a string of media assets in the early 2000s. Others worry that Poland is following in the footsteps of Viktor Orban’s Hungary.

Journalists fear that the point of the deal is to give Law and Justice a tool that it can deploy in the next round of local elections, which take place in 2023, and which represent the level of government where the party’s influence is weakest.

“I think this is a political move,” said a journalist at one of the papers being bought by Orlen. “Because Law and Justice was never strong in the local elections . . . and in my opinion, they will try to take over those local governments with the help of local media.”

Government officials deny that the deal is politically motivated. “This is a decision of a particular firm, a state one, but it is aimed at business questions,” the government spokesman, Piotr Muller, told the portal wp.pl, adding that it was “absurd” to claim that “if [Polska Press] is a German company, that’s good, but when it has a Polish owner, that’s bad”.

Others point out that on a national level, Poland’s media is still pluralistic, with numerous independent newspapers, internet portals, and radio and television stations. But Mr Zyzik, a former investigative journalist who heads a team of around 20 reporters, said in places such as Opole, where his paper NTO is an important independent voice, the impact could be significant.

“From the perspective of local media markets, there will be scandalous imbalance. The risk is obvious: if they make the sort of changes they did at TVP and public radio, then in Opole, these three groups — TVP, Radio Opole and NTO after these political changes — will be able to create a sort of steamroller than will simply roll over any opposition politician,” he said.

Faced with such concerns, some journalists working for Polska Press titles are thinking of leaving, even though the combination of the pandemic and existing pressures on the media means jobs will be hard to come by. Others are considering setting up new independent media groups.

Mr Zyzik is already preparing himself for a bumpy ride. “I will continue working as long as it is possible to do so independently at NTO. When the first political pressures, or attempts to influence the independent line of my newspaper appear, I will know how to behave,” he said.

“I will not endorse, with my name or with my face, any political interference at NTO.”



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Petrobras/Bolsonaro: bossa boots | Financial Times

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“Brazil is not for beginners.” Composer Tom Jobim’s remark about his homeland stands as a warning to gung-ho foreign investors. Shares in Petrobras have fallen almost a fifth since President Jair Bolsonaro said he would replace the widely respected chief executive of the oil giant.

Firebrand Bolsonaro campaigned on a free-market platform. Now he is reverting to the interventionism of leftist predecessors. It is the latest reminder that a country with huge potential has big political and social problems.

Bolsonaro reacted to fuel protests by pushing for a retired army general to supplant chief executive Roberto Castello Branco, who had refused to lower prices. This is politically advantageous but economically short-sighted.

Fourth-quarter ebitda beat expectations at R$60bn (US$11bn), announced late on Wednesday, a 47 per cent increase on the previous quarter. This partly reflected the reversal of a R$13bn charge for healthcare costs. Investors now have to factor the cost of possible fuel subsidies into forecasts. The last time Petrobras was leaned on, it set the company back about R$60bn (US$24bn at the time). That equates to 40 per cent of forecast ebitda for 2021.

At just over 8 times forward earnings, shares trade at a sharp discount to global peers. Forcing Petrobras to cut fuel prices will make sales of underperforming assets harder to pull off and debt reduction less certain. Bidders may fear the obligation to cap prices will apply to them too.

A booming local stock market, rock bottom interest rates and low levels of foreign debt are giving Bolsonaro scope to spend his way out of the Covid-19 crisis. But the economy remains precarious. Public debt stands at 90 per cent of gross domestic product. The real — at R$5.40 per US dollar — remains near record lows. Brazil’s credit is rated junk by big agencies.

Rising developed market yields will make financings costlier for developing nations such as Brazil. So will high-handed treatment of minority investors. It sends a dire signal when a government with an economic stake of just over a third uses its voting majority to deliver a boardroom coup.

If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button “Add to myFT”, which appears at the top of this page above the headline.



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South Africa’s economy is ‘dangerously overstretched’, officials warn

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South Africa is pushing ahead with plans to shore up its precarious public finances as officials warn the economy is “dangerously overstretched” despite the recent boom in commodity prices.

Finance minister Tito Mboweni hailed “significant improvement” as he delivered the annual budget on Wednesday and said that state debts that will hit 80 per cent of GDP this year will peak below 90 per cent by 2025, lower than initially feared.

But Mboweni warned that President Cyril Ramaphosa’s government was not “swimming in cash” despite a major recent tax windfall. The Treasury now expects to collect almost 100bn rand ($6.8bn) more tax than expected this year after a surge in earnings for miners. This compares with a projected overall tax shortfall of more than 200bn rand. Still, the finance minister made clear that spending cutbacks would be necessary.

“Continuing on the path of fiscal consolidation during the economic fallout was a difficult decision. However, on this, we are resolute,” Mboweni said. “We remain adamant that fiscal prudence is the best way forward. We cannot allow our economy to have feet of clay.”

The pandemic has hit South Africa hardest on the continent, with 1.5m cases recorded despite a tough lockdown. An intense second wave is receding and the first vaccinations of health workers started this month. More than 10bn rand will be allocated to vaccines over the next two years, Mboweni said.

‘We remain adamant that fiscal prudence is the best way forward’ – South African finance minister Tito Mboweni © Sumaya Hisham/Reuters

Even before the pandemic’s economic hit, a decade of stagnant growth, corruption and bailouts for indebted state companies such as the Eskom electricity monopoly rotted away what was once a prudent fiscus compared with its emerging market peers. 

Government spending has grown four per cent a year since 2008, versus 1.5 per cent annual growth in real GDP. The country’s credit rating was cut to junk status last year. Despite this year’s cash boost, the state expects to borrow well over 500bn rand per year over the next few years. The cost to service state debts is set to rise from 232bn rand this year to 338bn rand by 2023, or about 20 cents of every rand in tax.

The fiscal belt-tightening will have implications for South Africa’s spending on health and social services. On Wednesday Mboweni announced below-inflation increases in the social grants that form a safety net for millions of South Africans. “We are actually seeing, for the first time that I can recall, cuts in the social welfare budget,” said Geordin Hill-Lewis, Mboweni’s shadow in the opposition Democratic Alliance.

The finance minister is also facing a battle with union allies of the ruling African National Congress over a plan to cap growth in public sector wages. South Africa lost 1.4m jobs over the past year, according to statistics released this week. The jobless rate — including those discouraged from looking for work — was nearly 43 per cent in the closing months of 2020.

The South African treasury expects the economy to rebound 3.3 per cent this year, after a 7.2 per cent drop last year, and to expand 2.2 per cent and 1.6 per cent next year and in 2023 — growth rates that are widely seen as too low in the long run to sustain healthy public finances.

“The key challenges for South Africa do however persist, clever funding decisions aside,” Razia Khan, chief Middle East and Africa economist for Standard Chartered, said. “Weak structural growth and the Eskom debt overhang must still be addressed.” 



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Turkey’s Uighurs fear betrayal over Chinese vaccines and trade

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For five days this month, Jevlan Shirmemmet and other Uighur activists protested outside the Chinese embassy in Ankara, where they demanded to know the whereabouts of missing family members in China’s Xinjiang province. But on the sixth day, Turkish police stepped in.

They prevented the activists from gathering outside the diplomatic mission, positioned themselves outside their hotel and accompanied them wherever they went.

The stand-off reflects the difficult balancing act that Turkey, which is home to tens of thousands of exiled Uighurs, must perform with Beijing, not least because it wants closer ties and investment and is reliant on China for supplies of coronavirus vaccines.

President Recep Tayyip Erdogan, who casts himself as a champion of oppressed Muslims around the world, has in the past been a vocal critic of China’s actions in Xinjiang, the north-western region where the Chinese Communist party has interned more than 1m Uighurs, Kazakhs and other Muslims.

“On the one hand, Turkey wants to stand up for us, we know that, we feel it,” said Shirmemmet, 29, whose mother has been detained in Xinjiang since early 2018. “But they aren’t able to. We feel like their hands are tied.”

Jevlan Shirmemmet’s mother has been detained in the Chinese province of Xinjiang since early 2018
Jevlan Shirmemmet protesting in Ankara. His mother has been detained in the Chinese province of Xinjiang since early 2018 © Jevlan Shirmemmet

Analysts say that the plight of China’s Uighurs poses a problem for Erdogan, who is seeking alternative global partners at a time when relations with the west are deeply strained. “They are Muslims, they are Turks, and Turkish voters are sensitive about the issue,” said A Merthan Dundar, director of the Asia-Pacific Research Centre at Ankara University. “The government cannot establish very close relations with China. But it doesn’t want to cut all ties.”

In years past, Erdogan was one of the most outspoken global Muslim leaders concerning the plight of Uighurs, who are seen in Turkey as part of a broader global family of Turkic peoples whose rights Ankara has a responsibility to defend.

But opposition parties have accused Erdogan’s government of toning down its criticism to avoid upsetting Beijing. “Europe and America have spoken out against the oppression of our Uighur brothers in China . . . But there is still not a sound from Ankara,” Meral Aksener, leader of the opposition IYI party, said last month. Turkish officials insist that they continue to raise their concerns with Beijing behind closed doors.

Some figures in Erdogan’s government have advocated for stronger ties with Beijing in order to lure Chinese capital at a time when foreign direct investment from western countries has dwindled.

Investment so far has been limited, with the value of Chinese investment in Turkey standing at $1.2bn in 2019 in terms of equity capital, according to central bank data, compared with more than $100bn from Europe.

A woman in eastern Turkey receives the CoronaVac vaccine. Turkey has ordered 100m doses of the Chinese-made jab
A woman in eastern Turkey receives the CoronaVac vaccine. Turkey has ordered 100m doses of the Chinese-made jab © Chris McGrath/Getty

Ankara is eager for more. The country’s sovereign wealth fund has been courting Chinese investment, and plans to open an office in China in the first half of this year. Ankara also has a swap agreement with China’s central bank that helped to boost the appearance of Turkey’s depleted foreign currency reserves by an estimated $2bn. 

The pandemic has added an extra complexity to the relationship. While Turkey has struggled to procure European-made vaccines, it has a deal in place for 100m doses of the CoronaVac jab made by Chinese drugmaker Sinovac Biotech. Delays to the shipments in December coincided with a decision by China’s parliament to ratify an extradition treaty between the two countries. Turkey has yet to ratify it.

Yildirim Kaya, a member of parliament from the opposition Republican People’s party, said that the ratification of the treaty by Beijing had created “a great deal of panic among Uighur Turks who have escaped from China to Turkey”. In a set of questions posed to the Turkish health minister, he demanded to know if Ankara had faced pressure to ratify the deal to speed up the delivery of the vaccines. Turkish foreign minister Mevlut Cavusoglu reacted angrily to such suggestions. “We don’t use Uighurs for political purposes,” he said. “We defend their human rights.”

Analysts are also sceptical that China would use the vaccine, of which Turkey has already administered 6.2m doses, as such crude leverage. Ceren Ergenc, an associate professor of China studies at Xi’an Jiaotong-Liverpool University in Suzhou, believes it is more likely that Ankara was doing Beijing a favour by signing a deal for a vaccine that had yet to be approved in China — and that still has question marks over its efficacy.

“It happened at a moment when China needed not necessarily the money but the prestige in the international system about the credibility of its vaccines,” she said. “There’s a kind of indebtedness or reciprocity — Turkey still needs financial support from China so it did this act of buying the Chinese vaccine that had at the time not yet undergone all phases of testing.”

In response to questions from the Financial Times, the Chinese embassy in Ankara said the recent protests had sought to “smear” China and that their actions had threatened the safety of the diplomatic mission. It strongly rejected the notion that it had used Turkey’s need for vaccine doses as political leverage as “absolutely unfounded conjecture and malicious misinterpretation”.

Still, the episode has left many members of the Uighur diaspora feeling deeply nervous about their place in Turkey. “China sees us as criminals,” said Mirzehmet Ilyasoglu, who joined this month’s Ankara protests to demand information about his missing brother, brother-in-law and four friends. “We hope that this [extradition] agreement won’t come before parliament, but if it is signed then our concern will grow.”



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