Eastern Europe
Eight years after the Berlin
Wall's collapse, how meaningful are the political and economic differences that
once divided Eastern and Western Europe? Herewith, a primer on the transition
to democracy and capitalism in the old Soviet bloc and former Soviet
Republics.
Statistics gauging economic
change since communism's collapse are deceptive. All countries initially
foundered. Only since 1993, with the onset of widespread privatization of
economic activity, have most of them grown. However, even post-1993 averages
(compiled by the U.S. Agency for International Development from international
lending-agency data) may be misleading in evaluating economic success.
Take Albania, which averaged 8.4 percent growth during this period--and
attribute much (perhaps all) of its measured growth to a massive Ponzi scheme,
which collapsed this winter, bringing down the entire Albanian economy.
Central
Europe
Czech Republic ( 2.7
percent growth--measured for all countries as average annual GDP change since
1993--75 percent private-sector share of GDP in 1996. Democracy strong: free
elections; successful transfer of power; free media.) Despite economic
growth and the lowest unemployment in Eastern Europe , the Czech economy
has suffered a recent setback. In the last six months, several of the nation's
biggest banks collapsed because of loose lending and fraud. To reassure foreign
investors, last week conservative Prime Minister Václav Klaus announced a 5
percent cut in government spending. Opposition Social Democrats may use Klaus'
austerity program to mobilize growing discontent. Chain-smoking President
Václav Havel's failing health is another concern. Though Havel's
position is largely ceremonial, he helps give credibility to the widely
mistrusted bureaucracy and police.
Hungary
(1.25 percent growth; 73 percent private. Democracy strong:
free elections; successful transfer of power; constitutional protection for the
media and minorities.) Because it privatized early and aggressively,
Hungary has attracted $15 billion in foreign investment since 1989 --more
than any other Eastern European nation. To curry favor with NATO and the
European Union, for the last two years its centrist government (led by Gyula
Horn, also an ex-Communist) has battled popular nationalist parties. It
installed Western-style legal protections for minorities and gave up
long-standing claims to Transylvania, the Hungarian-populated section of
Romania.
Poland
(5.25 percent growth; 60
percent private. Democracy strong: free elections; successful transfer of
power; no state-run media.) It is considered Eastern Europe's greatest
economic success . Poland's government privatized more cautiously than
Hungary's or the Czech Republic's. Western fears about the 1995 election of
ex-party apparatchik Aleksander Kwasniewski as president (displacing Lech
Walesa, who calls him the "red spider") have been allayed by Kwasniewski's
support for further privatization and his enthusiasm for NATO expansion. (This
summer Poland, Hungary, and the Czech Republic will probably be invited to join
the alliance.) Amid much protest from the right wing, Kwasniewski's government
restored the legal rights to abortion and divorce removed by the Walesa
government.
Romania
(4.7
percent growth; 50 percent private. Democracy relatively weak: free and fair
elections; state-controlled media.) Communist Party boss (ostensibly a
social democrat) Ion Iliescu ruled between a mob's execution of longtime
strongman Nicolae Ceausescu in 1989 and his own loss of an election last year.
His successor, a geology professor named Emil Constantinescu, promised rapid
privatization and protection for an independent media. Romania is jockeying
to be included in NATO expansion , but nobody takes its candidacy
seriously.
Slovakia
(3.65
percent growth; 70 percent private. Democracy relatively weak: free elections;
strong state security force; state-pressured media.) Inheriting the most
depressed regions of former Czechoslovakia and a massive, outmoded
arms-manufacturing industry, it fared badly after its 1992-1993 split with the
Czech Republic. Slovakia has had less success than other Central European
countries at ousting corrupt Communist bosses from its bureaucracy.
Prime Minister Vladimír Meciar is accused of having orchestrated the kidnapping
of the Slovakian president's son, among other charges.
The
Balkans
Albania
(8.4
percent growth; 75 percent private. Democracy weak: widespread police killings
and beatings; no free elections; state-controlled media.) Between 50
percent and 90 percent of the country invested nearly $3 billion in a Ponzi
scheme that collapsed this winter. When the government failed to fulfill
promises to compensate investors, rioters pillaged the capital, Tirana, and
battled government-organized militias. So far the staunchly anti-Communist
government has relied on repression to survive the crisis.
Bosnia
(No economic data. Democracy weak: elections held last
September amid accusations of fraud.) Thoroughly destroyed by war ,
it is economically devastated and ethnically divided. The Dayton Accord
separates the country into two provinces: the Muslim-dominated Bosnian
Federation and the Serbian Republika Srpska. Serbian and Croatian minorities
complain they will not get a fair shake in the Muslim-majority state. The U.S.
military will leave Bosnia at the end of this year.
Bulgaria
(-2 percent growth; 45
percent private. Democracy weak: no elections until this month.) Bulgaria's
economy remains socialist . Price controls are drastic: McDonald's
restaurants in Bulgaria sell the cheapest Big Macs in the world, and oil costs
the same as in Saudi Arabia. Shortages and slipping wages sparked street
protests this winter that forced the ruling socialists to hand power over to a
caretaker government. A centrist coalition won elections this month.
Emigration to Western Europe has been significant : Five hundred thousand
people have left Bulgaria (total population, 9 million) since 1989.
Croatia
(0.15 percent growth; 50 percent private. Democracy
questionable: allegations of electoral fraud; authoritarian but popular
government; little repression of media.) Since Yugoslavia's disintegration,
Franjo Tudjman, a right-wing dictator, has exploited Croatian nationalist
sentiments. Demonstrations this winter against Tudjman quickly dissipated (at
the time, he was being treated in the United States for cancer--he may not live
much longer). Despite rampant war profiteering and a large state presence in
the economy, growth has been steady, and Tudjman remains popular .
Macedonia ( -3.2 percent growth; 50
percent private. Democracy relatively strong: free elections, though minority
groups claim oppression. ) Though Macedonia avoided the Balkan War,
ethnic tensions and instability are a problem. Last year, the country's
liberal, pro-West president was seriously injured in a car-bomb attack. A Greek
minority demands that Macedonia, with its ethnically Albanian majority, be
absorbed into Greece.
Serbia
(No economic
data. Democracy weak: corruption during elections; state-controlled media.)
Slobodan Milosevic, an old party boss, has retained power since 1989, appealing
to Serbian chauvinism to elude liberal reforms. War, hyperinflation, and
unemployment , however, have recently undermined his popularity. Two months
of street protests this winter were said to presage his ouster. His concession
of the opposition's demands (recognition of local election results and
reopening of nonstate-run media), however, ultimately solidified Milosevic's
control.
Slovenia
(3.5
percent growth; 45 percent private. Democracy relatively strong: free
elections; constitutional protection for the media and minorities.) The
most Western, liberal, and independent of the former Yugoslav republics,
Slovenia escaped the Balkan War unscathed . Unlike the other
agriculture-dependent Balkan economies, Slovenia has a significant
manufacturing sector, much of it high-tech. Its per capita income is already
higher than those of Portugal and Greece, members of the EU. However, because
of its reluctance to privatize, foreign investment is scant, and growth has
been lower than predicted.
The
Baltics
Estonia
(-1.25
percent growth; 75 percent private. Democracy relatively strong: safeguards
against police abuse and state interference in the media.) Thanks to
Finnish and Swedish investment, Estonia is the most prosperous Baltic
state , though its recovery did not begin until 1995. Russia still maintains
military bases near its border, and Estonia relies on Russian oil and gas. But
Estonia has been increasingly defiant: It switched official allegiance from the
Russian to the Greek Orthodox Church, criticized Russia's war in Chechnya, and
imposed requirements that make it difficult for its Russian-speaking minority
to become citizens.
Latvia
(-3.1
percent growth; 60 percent private. Democracy relatively strong: free
elections; successful transfer of power.) Economists predict the country
will soon benefit from its tight controls on inflation , which have
stymied short-term growth. For the last two years, Latvia has been governed by
a six-party "rainbow coalition."
Lithuania
(-4.2
percent growth; 65 percent private. Democracy strong: free elections;
successful transfer of power.) After flirting with a return to communism,
party bosses retook power in 1992. The conservative Vytautas
Landsbergis--musicologist, former chess champion, and post-Communist
Lithuania's first prime minister (between 1991 and 1992)--was re-elected last
year. The economy has foundered since the Soviet Union's collapse.
Western
Soviet Republics
Belarus
(-7.8
percent growth; 15 percent private. Democracy nonexistent: no independent
judiciary; repressive state security apparatus; state-controlled media.)
The most Soviet of the former Soviet republics, it is ruled by Alexander
Lukashenko , a dictator who recently consolidated his personal control over
the country's media and secret police. He has enhanced the country's ties to
Russia, vociferously opposes NATO expansion, and alleges that fledgling
opposition movements are CIA plants (there is no evidence of this).
Moldova
(-8.6
percent growth; 40 percent private. Democracy relatively weak: free elections;
hostility toward minorities; government interference with press.) Initially
touted as a model of reform, Moldova is now in a shambles. A rebellion by
Ukrainian and Russian-speaking minorities ended in 1992, with the
Romanian-speaking majority government retaining control over only half of the
country. It was the center of a recently shut-down Internet porn scam
that charged unwitting customers, mainly Americans, the cost of a long-distance
call to Moldova when they downloaded dirty pictures.
Ukraine
(-14.8
percent growth; 40 percent private. Democracy weak: widespread corruption and
organized crime.) Fifty percent of the economy is invested in the black
market to avoid taxes (as high as 89 percent) and corrupt government
officials--largely former Communists who require under-the-table payments.
Consequently, foreigners have only reluctantly invested $700 million--the same
amount as in Estonia, which is only a fraction of the size of Ukraine. The
government disbanded its nuclear arsenal in 1994 after a U.S. payment of $400
million. Despite nationalist hostility toward Russia, Ukraine remains too
dependent to do anything more than grumble about the Russian military's
continued use of its ports.
Transcaucasian Republics
Armenia
(1.03
percent growth; 50 percent private. Democracy weak: allegations of election
fraud; arbitrary arrests; restrictions on freedom of press.) Alienated by
its Muslim neighbors--Turkey to the west, Iran to the south, and Azerbaijan to
the east--Armenia aligns itself with Georgia and Russia (which keeps 12,000
troops on Armenia's border). An influential Armenian-American diaspora helps
the country get more U.S. aid per capita
than any country except
Israel . Since 1994, it has been ruled by an autocratic intellectual, who
has banned opposition parties and controls the media.
Azerbaijan
(-13.5
percent growth; 25 percent private. Democracy nonexistent: widespread
corruption; no free elections; repression of minorities.) A recent
cease-fire ended the Muslim government's six-year war with Armenia over control
of a Christian enclave in the northeast part of the country. Afterward, oil
companies scrambled to tap its prodigious reserves. Before the Soviets took
over, Azerbaijan was a boom country that attracted hundreds of European
speculators. The government has been unstable--done in by a series of
coups and the continued rule of Communist bosses.
Georgia
(-15.75
percent growth; 50 percent private. Democracy fairly strong: free elections but
continued human-rights abuses, including torture and forced confessions.)
Western expectations for Georgia--the highly regarded former Soviet Foreign
Minister Eduard Shevardnadze is the president--have been disappointed. The
government battles rebels from Abkhazia, a Muslim province in the country's
northwest. Russia still maintains thousands of troops in Georgia. Only last
year did the country begin to emerge from a severe depression, but it still
lacks consistent electricity in Tbilisi, its capital.
