Wednesday, September 27, 2006
Eastern Europe faces reform fatigue
Reform fatigue has hit the east, warn Stefan Wagstyl and Christopher Condon in today's Financial Times:
Once, the sight of tens of thousands of east Europeans demonstrating against their governments would spark waves of hope and joy in the west. Not any more. Riots in Hungary – the first since the overthrow of communism – are prompting doubt and concern about the region’s future. Demonstrators stormed the state television station in scenes reminiscent of the developing world, not of the well-heeled centre of Budapest.
...In Poland, voters could soon go to the polls for the second time in a year following the collapse of an unruly coalition. The Czech Republic has had no effective government since a June general election produced a hung parliament. In Slovakia, Robert Fico, the populist prime minister, holds power with the backing of Vladimir Meciar, an authoritarian predecessor, and Jan Slota, leader of the radical Slovak Nationalist party. Ferenc Gyurcsany, the Hungarian prime minister, says: “There is real rivalry in these countries between nationalist radicals and progressives.”
The dangers should not be exaggerated. Central Europe is not in crisis. Economic growth is 2–3 percentage points faster than in western Europe. Hostility to reforms may be no worse than in Germany, France or Italy. More than 15 years of economic progress, EU and Nato membership and foreign investment act as stabilising forces.
But prolonged instability would cause real harm. Mainstream parties are courting popularity by postponing painful reforms needed to complete post-Communist modernisation. While living standards are nearly 40 per cent higher than in 1989, they remain 45 per cent below west European levels. Dissatisfaction is opening doors to populists with sometimes limited allegiance to EU principles such as fiscal rectitude, market-based economic policies and respect for minority rights.
Trouble in central Europe could also undermine efforts to revive support for the EU’s further enlargement. While the European Commission on Tuesday gave conditional approval for Romania and Bulgaria to join next year, there is considerable uncertainty about future applicants, notably Turkey.
The origins of the turmoil lie in reform fatigue. Some 17 years after communism fell, central Europeans have had enough of restructuring. The benefits of change have been unevenly spread, leaving the low-paid, the unemployed and pensioners feeling abandoned and abused by corruption.
These sentiments were kept in check before EU accession, as few politicians wanted to risk losing membership through political or fiscal indiscipline. But since joining the EU in May 2004, central European politicians no longer feel the need to be on best behaviour.
In addition, with the need to maintain consensus gone, politicians are free to resume old quarrels, including disputes between ex-Communists and former anti-Communists that have resurfaced in Hungary and Poland and ethnic rows in Slovakia. Aleksander Smolar of the Stefan Batory Foundation, a Warsaw think-tank, says: “I think we are seeing a delayed reaction to the whole very costly and very painful process of European integration.”