During recent days political turbulences continues in B&H with active participation of and negotiations by high ranked international diplomats with key local political stakeholders. The event of the week was the visit of Mr. Escobar, special representative of the US President for Western Balkans, who held meetings with main politicians in B&H. The key messages after the meeting with Mr. Dodik, political leader of the Republic of Srpska, who has started unconstitutional secessionist motions with an aim to withdraw from the State level institutions, were in the spotlight. Two key messages have been sent by Mr. Ecobar:
This was confirmed and followed also by the similar announcements of the UK and German government in this week, through unilateral sanctions motion toward RS's political individuals if the situation is further escalated by RS leaders.
After the meeting with Mr. Escobar, Mr. Dodik continued with his rhetoric in the media, that he will push further with his motion and decisions on revocation of RS from the key three State institution the B&H — Armed forces, the Indirect Tax Authority and the High Prosecutors Office of B&H announced to be brought at the National Assembly of RS session until mid-November 2021. However, our baseline scenario is that his rhetoric will cease in coming months, after very offensive and coordinated actions of the US, the UK and the latest announcements from Germany.
We expect further very intensive presence of the international community in coming months in B&H who are trying to calm down the political momentum, mediate and organize constructive talks between key political leaders, Mr Dodik, and other two key politicians from the Federation of B&H (Mr Izetbegović and Čović), especially on key stumbling pieces of legislation — Constitutional and Electoral Law which needs to be reformed to enable the viability of the sovereignty of the country and being in line with democratic principles and EU requirements.
In the next week, another high-ranked diplomat from the US, special advisor to the State Secretary, Mr. Derek Chollet is arriving also on request of the US President and the State Secretary to meet B&H politicians. The visit also comes after this week's visit of the President of the European Commission, Ms. Ursula von der Leyen to the President of the US, Mr. Biden, where one of the topics was also current political turmoil in the Western Balkans and B&H. During November, a visit of Mr. Varhelyi, the EU Commissioner for the Enlargement and Neighboring policy is expected.
In the US inflation in October was considerably above expectations. In CEE elevated inflation dynamics continue to pose problems for central banks. We expect that the Hungarian National Bank to follow the recent surprising rate hikes in CE. The preliminary GDP result for Poland surprised to the upside. We expect next week's GDP releases for other countries to show a slight slowdown of growth. Worryingly, political tensions within Bosnia, on the borders between Ukraine and Russia and between Belarus and Poland have flared up again this week.