Sun, Sep 24, 2006 - Page 9 News List

The Soviet ways are creating headaches for the New Europe

The EU's brand new members inherited wildly inefficient public sectors from the Soviet system that are now in urgent need of being professionalized

By Charles Wyplosz

The riots in Budapest, incited by leaked tapes that show Hungarian Prime Minister Ferenc Gyurcsany openly admitting that his government had lied for more than a year about the country's dire finances, are but the latest evidence that things are going seriously wrong across Eastern Europe.

Last June, the Slovaks evicted the government that brought the country out of the international isolation and economic malaise that it had suffered under the autocratic regime of Vladimir Meciar. Mikulas Dzurinda, whose reforms provided the country with growth and economic stability, was replaced by Robert Fico, a leftist who, having forged an alliance with Meciar and a neo-fascist party, has also adopted a worrisomely populist tone.

That same month, Hungarians re-elected Gyurcsany, who had adopted a supposedly reformist program, but also oversaw a massive accumulation of public debt. Earlier plans to adopt the euro quickly have now been shelved, with the target date pushed back to 2011 or 2012. But even that may be wishful thinking. Meanwhile, financial markets fret about the country's budget deficit and talk of a serious crisis.

Meanwhile, the Czechs managed to elect a perfectly hung parliament. Prime Minister Mirek Topolanek is an advocate of urgently needed reforms, but he lacks a parliamentary majority and is pressing for a fresh general election in the first half of next year. With no means of stemming election-year fiscal expansion, the Czechs, too, have been forced to abandon their 2010 target date for euro adoption.

Then consider Poland, where the Kaczynski twins, who hold the presidency and the prime ministership, have allied themselves with populist, xenophobic, and anti-Semitic parties. One of their priorities is to attack the central bank and slander its governor, Leszek Balcerowicz, the iconic father of Poland's economic transformation, with accusations that echo those of the Stalinist era.

more bad news

So much for the region's "big four." But bad news is emerging from the smaller countries as well, including the Baltic states. Across Central and Eastern Europe, the scene is almost universally depressing.

When so much goes wrong at the same time, it is tempting to look for a common cause. One factor that is often cited is "reform fatigue."

In barely 15 years, these countries have moved from central planning and economic backwardness to "normal" market economies with impressive GDP growth. But rapid change is always unnerving, and not everyone has emerged better off. Above all, uncertainty has become the norm, in contrast to the gray but predictable future offered by the old communist regimes.

Today, many people now long for that period, which they see as less driven by material values. Communist parties, more or less reformed as socialists, appeal to a surprising number of voters. In some countries, like Slovakia and Poland, far-right nationalist parties provide another alternative, by offering the soothing appeal of traditional values and familiar enemies.

Reform fatigue implies that Central and Eastern Europe needs a respite to catch its breath. But another explanation of recent developments in the region begins by noting that post-communist reforms were largely dictated from outside, as a condition of admission to the EU. With membership achieved and EU money starting to pour in, leaders feel secure enough to let economic policy slip.

This story has been viewed 2671 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top