02/06/2014 World Business Report

Will the taps remain open? Talks over Russian gas deliveries to

Ukraine continue in Brussels. And we focus on The Czech Republic `

25 years since it exited communism ` the problem of corruption is

recognised still as one of its biggest problems.

Welcome to World Business Report. I'm Sally Bundock.

Also in the programme further signs the world's number two economy,

China is seeing stronger growth. A final round of talks are set to

start in Brussels today after Ukraine's Naftogaz state energy firm

transferred 786 million dollars to its Russian counterpart Gazprom.

Ukraine is bowing to pressure from both the EU and the Kremlin to keep

talks alive. Russia says it's owed 5.2 billion dollars ` including

three and a half billion in arrears ` and is demanding Ukraine pays up

front for all future supplies. But Gazprom now says it is willing to

discuss a lower price and analysts believe that a compromise is in

sight because Russia would prefer to avoid complicating its relations

with Europe further. Russian gas transits through Ukraine supplying

about 15% of European needs and a top EU envoy is now urgently seeking

a compromise that could save 18 member states from seeing their

deliveries start to dwindle. With me is Livia Paggi, a political risk

advisor at the consultancy. Good morning. How well do you think these

talks will go today? It would seem both sides are willing to see

progress. I think that is absolutely right. Friday was a real

breakthrough, the fact that Ukraine was made king `` willing to make a

payment. It has a ground for a smoother negotiation today. There is

likely we will see negotiations going on. All sides are willing to

keep going and keep the talks alive. Can we say which side has the

upper hand at this point? This is what the dispute has told us, it is

not clear who has the upper hand. Russia is owed this amount of

money, we see that the Ukraine is also not willing to pay such a high

price. After the price was hyped up by 50% and we have also seen the

west is also trying to broker peace deal. I think that it's going to be

a lot of to and fro and it means that make it remains to be seen. Is

quite a critical week for Ukraine, its president will be inaugurated at

the end of the week. As this Ukraine crisis that occurred in 2014, does

that mean this story, this spat between Ukraine and Russia over gas

prices will they be change or maybe possibly and in the future because

it's something that has cropped up every winter the years it would

seem. It's a story that we keep seeing over and over again. It has

come into light at the moment because it really represents where

there will be a crisis. It's going to keep going on probably, is going

to fall to the background. What it doesn't mean is that the Ukraine

will be able to manage its political crisis internally. While we might

see a breakthrough amongst western, Russian relations, we're likely to

see ongoing violence in Ukraine. We appreciate your time. We will keep

an eye on the talks in Brussels today. We will update you as and

when we get news. Since the revolutions that brought

about the end of the communist bloc 25 years ago, one of the thorniest

problems to plague parts of Eastern Europe has been corruption. In the

Czech Republic its openly talked about ` a recent report from the EU

showed 95% of Czechs perceive corruption as a problem and 71% of

companies consider it to be the main hurdle to doing business in the

country. The government last year collapsed amid a scandal involving

allegations of corruption and abuse of office. Tanya Beckett reports

from Prague. Harmony filters through the streets

of Iraq at a quarter of a century after Soviet power lost its grip,

these musicians are used to reading between the lines. This man worked

in ten years as a lawyer for the government. He says he witnessed

evidence of corruption first hand. TRANSLATION: I'm talking about

dozens of transactions that were a regular. They were documented in my

objections were ignored and I was dismissed after an enquiry together

with another enquiry who also complained. He has since been

appointed to a job elsewhere in government. New to the interior

ministry, this woman says the root of corruption reach back to the full

of the Iron Curtain. Most of the people in the 90s... The politics

was taken over by people who were not friends of transparency.

Distrust of politicians and distrust in business. Czech people do except

that in the switch from one system to another there is a gap into which

bad behaviour can slip. What they find it harder to come to terms with

is that in the Czech Republic, in common with many other countries in

Eastern Europe, 25 years after that transition was made, corruption

remains a major problem. The journey to clean economy is precarious and

uncertain. Here in Prague, checks have not lost hope that they will

make it. `` Apra tos. Efforts by the Chinese government to

bolster growth in the economy are showing early signs of success. The

latest growth numbers show that the month of May was a good one for its

vast factories. Rico Hizon is in our Asia Business hub in Singapore.

Happy Monday, Rico Hizon! Tell us more about China. Well, the

purchasing managers index which is a factory output number scheme is

expected at 50.8. A number above 50 is an expansion, anything below is a

contraction. The number is reinforcing views of the world 's

second`largest economy is indeed regaining some momentum in the

second quarter following Beijing's targeted initiatives. This includes

the construction of railways, public housing and tax cuts for small

businesses. The data also shows that export orders and domestic demand

have indeed picked up. To sustain these gains, authorities in the

mainland have now implemented new initiatives to help lower funding

costs and reduce operational expenses and these include Loring

requirement for banks. Increasing the scale of relending and bond

financing to support smaller companies and a further reduction of

administration fees for businesses. When you speak to some economists

here, they say in underlying weakness in the economy,

particularly in the property market as well is disappointing growth in

investment and consumption. Thanks a lot. Good to see you.

Rico, tell us more. In other news. Abu Dhabi based airline Etihad says

it has finalised the conditions it requires for a major investment in

Alitalia, following months of negotiations. Etihad did not give

further details, but in a TV interview Italy's transport minister

said Etihad was ready to invest around 600 million Euros in

Alitalia. Reports say that in return Etihad will receive a 49% stake in

Alitalia. The deal needs to be confirmed by the board of Alitalia

and other parties. The Obama administration is poised

to unveil the first rules limiting carbon emissions from the thousands

of power plants across America. The pollution controls form the

cornerstone of President Obama's campaign to combat climate change

and a key element of his legacy. The Environmental Protection Agency will

make public the details of the plans for the first time on Monday. Power

plants accounted for about 40% of US. Carbon pollution. Many in the

energy sector are already worried how these new guidelines will affect

their industry. Markets today as you can imagine

given a boost by the news about China and how things are going

there. The markets in Hong Kong, China and New Zealand are close

today for a public holiday. Indicate is up about 2%, a good start to the

week for the Asian markets. Those other currencies, I will see you

soon. `` those are the currencies. Thanks very much to Sally for that.

The family of Gareth Huntley who's missing in Malaysia have thanked the

British and Malaysian governments for their renewed efforts to find

him. The 34`year`old was last seen going for a trek to a waterfall