ICANN has opened their new fast track process for "countries and territories that use languages based on scripts other than Latin" to get domain names that identify the country or territory in its own language. It's not clear to me what the policy is supposed to be for countries whose languages use extended Latin with accents and other marks that aren't in the ASCII set.
Any country that uses an extended Latin character set can use extended characters in 2LDs right now, and I can't offhand think of any whose current unaccented two-letter ccTLD isn't an adequate mnemonic for their name. But let's say that Serbia feels that .RS is kind of lame, so they apply for and get .Србија which is perfectly reasonable, since that's the Cyrillic character set.
Then Romania decides that .RO is too generic, so they ask for .România with the circumflex over the â, as it is properly spelled in Romanian. That's an IDN, so how can they say no?
Hey, say the Hungarians, they got their country names, we want .Magyar. Oh, no, that's ASCII, that will be $185,000 and a highly uncertain multi-year process. Really?
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