UKRAINE, UZBEKISTAN SIGN ECONOMIC COOPERATION DEAL. On 7 October in Kyiv, Ukrainian President Leonid Kuchma and his Uzbek counterpart, Islam Karimov, signed an agreement on economic cooperation for the period 1999-2008, Interfax reported. Ukraine and Uzbekistan expect to increase their trade turnover by 20 percent this year. Uzbekistan confirmed its intention to export cotton in exchange for Ukrainian industrial products, in particular, ferrous alloys and steel. At a news conference the same day, Kuchma and Karimov expressed their concern over Russia's reluctance to sign a package of documents related to the creation of a CIS free trade zone as of 1 January 2001. JM
Visions, by their very nature, are hard to sustain. When the Berlin Wall fell 10 years ago, heralding a new era in Europe, much of the world had a common vision: namely, that the countries of the crumbling Marxist sphere would join the Western community in enjoying political freedoms and economic prosperity based on market mechanisms.
During the following decade, the dream of democracy has been largely fulfilled--with some exceptions--in a vast arc of territory stretching from the Baltic to the Black Sea.
Economic well-being, however, has proved more elusive, and the revitalization of Central and Eastern Europe is still an unfinished story. The transition to market economies has not been easy, and the relative success or lack of success of individual countries reflects a mix of complicated factors.
Only Poland among the transition states has lifted its economic prosperity well above the level of 1989. Polish per capita incomes this year are expected to reach about 130 percent of 1989 levels. At the other end of the spectrum, Ukraine, with a stalled reform process, has seen people's incomes plummet to half the levels of 1989.
Because Poland opted for radical reforms, the simple conclusion might be that the so-called "big bang" method produces the best results, despite its high social costs. Hungary, too, has successfully opted for a radical course, but Slovenia, Slovakia, and the Czech Republic have income levels equal to or greater than that of Hungary--about 100 percent of their 1989 levels--and have chosen more gradualist paths.
A senior economist with the Paris-based Organization for Economic Cooperation and Development (OECD), Val Koromzay, told RFE/RL that the real lesson of the last decade lies not in a choice between big bang or gradualism. Rather, the lesson is that the essential factor is coherent reform. He says time has been reasonably forgiving of countries that have been slower or faster. Those that got into trouble did so because they backtracked away from reform, owing to political opposition or perceived hardship.
Poland, Koromzay argued, was "always moving in the same direction and despite numerous changes of government, I think one can see clearly a thread of continuity, a direction."
Romania, by contrast, has lacked this sense of purpose, and its political will has faded, Koromzay argued. Nervous governments have sought to spare the population the pain of restructuring, he noted, but instead they have condemned the people to the continuation of miserable living standards with little prospect of improvement.
"In Romania from the beginning there was this terrible concern about hardships that transition would cause," he commented. "Every time they came to a hard decision, for instance on tightening budget constraints on enterprises, too often they blinked. And that in turn...made their macroeconomic policies incoherent."
With regard to Bulgaria, Koromzay said that it wasted the early years of transition under non-reformist governments. Its industrial production is still one-third less than it was in 1989, but recently there has been fresh momentum under reformist Prime Minister Ivan Kostov. Koromzay noted that this is encouraging: Bulgaria, he commented, "did not get its act together for a number of years. But it shows on the one hand how costly it is to delay, but on the other hand that if you can get your act together even at a rather late date, the possibilities for breaking out of a very bad situation continue to exist."
Progress across the transition region is needed soon, because after a decade of profound change, people are weary. In the Czech Republic, opinion polls show growing support for the Communists among frustrated voters. Similarly in eastern Germany, recent state elections show strong support for the former Communists. And in Poland, populist-nationalist trends opposed to reform are evident.
Another expert in the region's transition process, Giovanni Cornia of the United Nations University in Helsinki, told RFE/RL that democracy "with falling incomes and rising mortality is not a particularly attractive type of democracy."
Cornia also advanced a theory to explain, at least in part, why some countries have done better than others: the countries that are succeeding today are those that have a better-developed institutional framework, dating in part from before the communist era. In other words, those countries of Central Europe that were traditionally more institutionally advanced than, say, their neighbors in the Balkans, are the ones that will lead the race back into the market economy today.
That historical advantage has also helped countries like Poland, Hungary, and the Czech Republic gain places as frontrunners for membership of an expanded European Union. In turn, Cornia says, the hope of entering the EU has been a powerful motivation.