February 5, 2021

Europe

EUROPE: CEE PULSE

BY Andrius Tursa

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( 4 mins)

Following a constitutional court ruling, the Czech parliament has to adopt new electoral rules ahead of the parliamentary vote scheduled for October. In Poland, the government revealed details of the proposed advertising tax, while Russia is stepping up pressure on social media and foreign technology companies. Finally, Ukraine sanctions three pro-Russian television channels.

Czech Republic

The constitutional court on 3 February ruled several provisions in the law on elections to parliament as unconstitutional and subsequently annulled them. More specifically, the court lowered the vote threshold for multi-party coalitions to enter parliament from 10% to 5%, aligning them with the threshold for single parties. In addition, the court said that the use of the D´Hondt method for allocating seats together with 14 electoral districts each represented by a different number of deputies (ranging from 5 to 16) was unconstitutional. As a result, parliament will have to urgently adopt the new wording of the annulled provisions, as the election to the lower house is scheduled for 8-9 October. If the new electoral law is not adopted by then, the country would slip into a constitutional crisis. Based on previous election results, the constitutional court’s ruling might be beneficial to parties polling just above the 5% threshold.

Poland

This week, the government revealed details of a new advertising tax, which is expected to come into effect on 1 July. The proposed tax would apply to conventional and internet advertising, including private media service providers, broadcasters, cinema network operators, outdoor advertising firms and publishers. In case of internet advertising, a 5% levy on advertising revenue would apply to companies with global revenues above EUR 750mn whose advertising revenue in Poland exceed EUR 5mn per financial year. In terms of advertising on TV, radio and cinema, a levy ranging from 2% to 15% would be applied to revenue exceeding PLN 1mn (around EUR 22k) per annum, while the threshold for print media would be PLN 15mn (around EUR 3.3mn). The finance ministry expects to collect around PLN 800mn (EUR 180mn) from the new tax in 2022. In general, the tax would disproportionally affect large foreign media companies operating in Poland.

Russia

As a result of the improving epidemiological situation, federal and regional authorities are continuing to ease restrictions. The capital Moscow lifted a requirement for 30% of all businesses’ employees to work remotely, while federal universities are set to return to in-person teaching as of 8 February. However, the swift reopening could be premature given still relatively high infection rates, the risk of new virus strains and slow vaccination progress in the country. While there is no official data, the Gamaleya research institute – which developed the Sputnik V vaccine – estimated that around 2mn citizens (1.3% of the population) had been vaccinated as of 29 January. Meanwhile, pressure is growing on social media platforms operating in the country over their alleged role in promoting or facilitating anti-government protests. As of 1 February, social networks with at least 500k users are obliged to block certain content, including calls for mass riots or participation in unauthorized action. In addition, authorities are preparing a list of new requirements for foreign technology companies in Russia set to be revealed by 1 August.

Ukraine

On 2 February, President Volodymyr Zelensky imposed sanctions on three television channels owned by Taras Kozak, a deputy of the pro-Russian faction Opposition Platform – For Life (OPZZh) and a close associate of the influential pro-Russian oligarch Viktor Medvenchuk. According to Zelensky, the sanctions were imposed due to the funding of these channels from Russia as well as their “cooperation with terrorist organizations”. The OPZZh considers sanctions as unconstitutional and pledges to initiate an impeachment procedure for Zelensky, which is unlikely to succeed. Besides dealing with the pro-Russian propaganda, Zelensky’s move could be perceived as an attempt to stem flagging approval ratings of his Servant of the People (SN) party as well as to win favor with the new US administration, which congratulated the step. The recent expulsion of the controversial deputy Oleksandr Dubinskyi – who is under US sanctions – from the SN group in parliament as well as new restrictions against Chinese citizens and companies affiliated with investors in the domestic jet engine manufacturer Motor-Sich could be seen in a similar light.

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