Tuesday, 5 January 2010

Bulgaria May Block Turkey's EU Bid

Bulgaria is demanding $20 billion compensation from Turkey for the homes of the Bulgarians forced out of Turkey in the early 20th century and promising to block Turkey's EU application until the money is paid.

Nice one, Bulgaria. But I'd like to ask how are the Bulgarians arriving at this figure? Are they using the estimated present value of what those homes would be? Because that isn't the correct approach. The correct approach would be to estimate their present value then apply market interest rates appropriate to a very high-risk loan to the entire sum for the period since the Bulgarians were forced out. This might raise the compensation value to closer to $50 billion.

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