Through the Watch List, CEIS identifies and labels countries based on the economic environment their policies have created, as well as the ability of companies that operate in those countries to abide by the rule of law and meet their contractual or adjudicated obligations.
Countries in red present the largest threat to Europe’s economic security. Collectively, these countries are Ground Zero for Europe’s most egregious offenders, who have the most to lose, and those who largely threaten the continent’s financial stability.
Poland – Despite its coveted position high within the European economic hierarchy after the fall of communism, Poland has in recent years fallen back into its past ways of corruption and cronyism. For example, Telekomunikacja Polska S.A. (TPSA), the country’s primary telecommunications provider, recently reneged on an arbitrated payment of USD $540 million to Danish telecom provider DPTG. TPSA’s failure to uphold the mutually agreed-upon settlement amount endangers the country’s otherwise positive reputation as a repository for FDI. Similarly, in 2002, the Port Authority of Gdansk (ZPMG) reneged on a contract with Canadian-based Europort in a revenue sharing arrangement. The case is still pending.
Portugal – The country’s dramatic banking crisis coupled with job losses and drastic reductions in capital inflows point to an uncertain financial future in Portugal.
Estonia — An apparent trend toward increased government intervention in the private sector and disregard for contract enforcement may threaten Estonia’s recent stellar GDP performance. Cases like the failed privatization of Estonian Railway and the ongoing dispute between AS Tallinna Vesi and the city of Tallinn present troubling examples of contract vitiation and lack of respect for the rule of law.
Latvia – Rising unemployment, a declining GDP and a large lag in FDI have created an unstable economic climate, causing global businesses to avoid Latvia when considering investment opportunities in the region.
Bosnia & Herzegovina – Boznia & Herzogovina’s rising unemployment and increasing deficit have slowed GDP growth, making it an unattractive market for foreign direct investment.
The economic stability of the countries in yellow is at-risk. These countries are a curious mix of established, industrialized markets as well as those that are just emerging. One the one hand, many companies that operate within the borders of the more industrialized nations are given to frequent predatory pricing practices, subject to onerous government regulation, and a heavy-handed taxation policy that gives international investors great pause. On the other hand, many of the less-developed countries are host to companies that still consider cronyism and corruption the standard business practices of the day. It is for these reasons that the following countries are at-risk.
Countries in green provide excellent examples for their European neighbors. These countries offer companies and investors an honest, transparent, and open market, honor their obligations, respect the rule of law, abide by international standards of business and trade, and thus create in their countries an attractive home for foreign investment.