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And You Thought the Economy Was Scary?
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Kieran Doherty / Reuters
Over in Eastern Europe, the recession is threatening fragile governments and alliances, promising the kind of chaos not seen since the '30s.
The global economic crisis has thrown up the unlikeliest of European marriage counselors. As the financial storm threatens to capsize some of the weakest economies in Eastern Europe, it is Robert Zoellick, once George W. Bush’s deputy secretary of State and now president of the World Bank, who has become the most outspoken defender of a united Europe. Last month, he warned EU bankers and politicians that they had a responsibility toward keeping the 20-year-old East-West European marriage intact.
“It’s 20 years after Europe was united in 1989,” Zoellick said, arguing in favor of a joint World Bank and IMF $31 billion bailout package for the region. “What a tragedy if you allow Europe to split again.”
Multiply the consequences of the current American recession several times and you have an idea of what lies in store for Eastern Europe.
Give or take the odd Balkan war, the “end of history” (as coined by Francis Fukuyama) has lasted 20 years in Eastern Europe. But today, it’s the resurrection rather than the death of history that has cast its shadow over the region. Those dark clouds on the Eastern horizon are the impending storms of economic collapse. The political and economic situation in much of Eastern Europe—particularly in Latvia, Hungary and Romania—is about to turn very nasty. Multiply the consequences of the current American recession several times and you have an idea of what lies in store for much of the region.
It’s happened before, of course. The impact of today’s global meltdown on the region is raising all the ghosts of the interwar period of the 20th century—those dreadfully dark years in Eastern Europe when a similarly dramatic global monetary meltdown triggered economic depression, mass unemployment, and the rise of autarky, authoritarianism, and xenophobia. The end result was the destruction of democracy everywhere outside Czechoslovakia and the emergence of popular fascist movements in Austria, Romania, Hungary, and, of course, Germany.
Yet history never fully repeats itself—not even in Eastern Europe. In comparison with the fragile new states that emerged out of the peace treaties of Versailles and Trianon, today’s Eastern European democracies are much stronger, their economies more robust, and their laws and bureaucracies more legitimate. The EU exists today of course—incorporating all of Eastern Europe except for the Ukraine, Belarus, Albania, and most of the former Yugoslavia. Most significantly, the ethnic and cultural heterogeneity of interwar Eastern European countries has been replaced, through the death camps and the population transfers after the Second World War, by relative homogeneity.
That said, just as in the '30s, the global liquidity crisis has decimated the demand for many of Eastern Europe’s primary products, such as Romanian steel or Hungarian metallurgy. Most of the region’s currencies, even the relatively strong Czech koruna and the Polish zloty, have taken a pummeling. Most ominously of all, the highly leveraged economies of Hungary and Latvia have become so indebted to German and Austrian banks as to flirt with national bankruptcy.
German Chancellor Angela Merkel tactfully describes the situation as an “extraordinary international crisis.” The reaction of the Eastern European street has been less circumspect. With its economy shrinking 15 percent in the last year, Latvia has experienced the country’s worst political disturbances since the magical year of 1989. There have been riots too in Lithuania, Greece and Bulgaria as well as daily demonstrations against governments in Ukraine, Montenegro and Serbia.
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Fascism...round 2...here we come.
Too bad for Hungary. Serves them right for Magyarization of the late 1800's.
Interesting article.
It seems that the historic socio-economic weaknesses of these nations is what made them such easy pickings for absorbsion into a larger, thus stronger former soviet union of days gone by.
Unfortunately for them, their eagerness to imitate the American/ european styles of "scortched-earth" capitolism may turn out to be their downfall this time around.
Just like the victims of Mr. Madoff, large and constant returns on their economic investments were all that they observed, and they continued to dig deeper in order to get more of a return on their national investments. And just like the victims of Mr. Madoff, they never thought to examine the fragile nature of riding such a purposely constructed bubble. Thus, they will eventually wind up in the same situation of the other victims, having to start over.
So many variables exist now. Will they be taken over by a larger hostile nation seeking a return to it's glory days, or will they willingly join up with such an entity simply to avoid begginig for basic necissities.
This could be a very bad thing for everyone involved unless some significant alternatives arise from a responsible "group-think" of concerned nations.
Perhaps some in that region are considering breaking out the old dusty red flags from the good old days.
Johnny-Boy, it is not true that "historic socio-economic weaknesses of these nations is what made them such easy pickings for absorption into a larger, thus stronger former soviet union of days gone by". What made them easy pickings was that they were occupied by the Russian Army, which set up puppet governments, or left control of the Military and Interior Ministries in the hands of Moscow-trained Communists, who quickly turned these nations into Soviet satellites.
Obama needs to have some private face time with Putin. He needs to go over in some generals Fast jet on the sly and just talk. Gain some trust and try to understand what the Russians need and want. The E.U. is already begging for help (Brown's visit). We have to stay on the sidelines on this one. Let the wannabe Globalists taste this bitter pill on their own. They set the Eastern Block countries up for this mess.
I wonder whether the nations of Eastern Europe are now regretting the fact that they invested so much of their political energy since joining the EU in frustrating the will of their larger European neighbours -- as often as not to the amusement of the US. Perhaps this downturn will remind the broader European family of those important social skills required if a community is really going to work together.
Why does Mr Keen talk about, "daily demonstrations against governments in the Ukraine, Montenegro and Serbia."?
None of those countries are in the EU, as he pointed out, so other than their geographical proximity, what's their connection in this article?
Follow up question: it was suggested back before/during the cutting up of Yugoslavia, that it was a calculated move to ease the region's absorption into the EU/EC. Why hasn't that happened?
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If we think we have the best socio-economic & political system (which I don't..), then we should just take over the planet the old-fashioned way:
Conquer
Kill
Construct
Conquer: We use all the weapons we created (and build more), then, once the deed is done, outlaw any army except the UN Peacekeepers (when are we going to figure this out? There was a famous soldier - Patton, perhaps, who recognized the ultimate futility of war)
Kill: Alas, we have to exterminate the current generations just like the white man did to the native American. This has proven to be one of the only successful occupation strategies. If a terrorist blows up themselves and their victims, we have to kill their surviving family to remove the inventive for Jihadists. There will always be 'collateral damage' but look how successful Hiroshima ultimately was. Once we've done this, we then must outlaw killing - even capital punishment, as our society must always represent the BEST of our philosophy. Life in prison without the possibility of parole for murder is surely sufficient.
Construct: Finally, we do the right thing post-war; We Rebuild. And we re-educate those cultures that need it with our language, our philosophy, and our highest ideals that embrace care for the planet, care for each other, and a return to values that promotes truth, honesty, respect, and integrity. We implement a justice system which uses plain language, not the current 'legalese' which can be twisted to allow the wealthy to abdicate responsibility. We embrace the ideal of truth above all else.
The result of this strategy would be to put everyone back to work as soldiers, engineers/builders and teachers. Sure, this idea sounds heartless to liberals, and powerful to conservatives, but it is the result of a cynical Independent who is tired of the hypocrisy, the ego, vanity, compulsiveness of greed and power, and the endless lying.
I don't know if it would work, but I do know that humanity is out of time. We have the next 10-20 years to right all the wrongs of the past millennium. We have to look in the mirror and acknowledge the zits; we have to search within ourselves with brutal honesty and admit our flaws. Then we must genuinely forgive ourselves (and each other) so that we are clear to begin the most important and difficult task of our lives. We have to embrace and act on the wisdom of the ages, and take that next evolutionary step of our species. When we acknowledge our interconnectedness - that we are a large family, from the Sun to the Planet to all the creatures on it, we can then utilize our collective consciousness and turn Earth into Heaven. It's up to us - what will you do?
Sorry guys - I am from Eastern Europe - and this is one ill informed article. Anybody who knows anything about Eastern Europe will refrain from quoting the Hungarian PM - he is something of a laughing stock in Hungary -
Apart from the obvious economic changes, which were most welcome by the majority - the last 20 years in Eastern Europe were about FREEDOM - There is simply no alternative to that -
And as for the economies in the region - as strange as it may seem, most big banks here are quite solvent for a very simple reason, they are much more conservative in their lending practices ... In some places one needs a 125% collateral for a business loan and a 100% collateral for a morgage -
Most countries here did not have a proper stock market until 5-10 years ago - it is much harder to have a boom and bust situation - things are all much cheaper -
Also - things in general are smaller in scale to begin with - people don't expect to live in a two floor house and have two cars - and I am not passing judgement, but the majority is happy with a 80 -100 sq.m. apartment - as a result mortgage loans are nothing like the insane housing prices and lending prices in the US -
Finally - these are small and manageable countries - whose GDP is smaller than the annual turnover of the biggest US companies -
The title of the article is quite alarmist - and while it may probably attract attention - it says nothing about the actual state of affairs in the region -
I was a student in the US - the stress you live is something you will never find out of the US - least of all in Europe -
There is something about the way of life in the US - that just puts too much pressure on each and every individual - and this is not necessarily the right way - There is no right way - I think it is just ill informed to speak as though one knows what 'the right way' is -
Thank you.
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