New Divisions, Ten Years On

The Birmingham Post (England), February 6, 1999 | Go to article overview

New Divisions, Ten Years On


Nearly ten years after the fall of the Berlin Wall symbolically ended four decades of isolation for the East Bloc, new fault lines are dividing central Europe.

Where once the region's political and economic elite looked east to Moscow, today they look west to Brussels.

Western cars ply the increasingly jammed streets of central European capitals and smart Western retail outlets have replaced many of the dowdy Communist-era shops in Prague, Warsaw, Budapest, Bratislava, Bucharest and other cities.

But analysts say a key distinction has emerged between the countries of Central and Eastern Europe which are heading for quick European Union (EU) membership and those which are not.

Five countries in the region have begun talks with Brussels on rapid accession - the Czech Republic, Poland, Hungary, Slovenia and Estonia - while the rest, the "outs", must wait.

The European Commission confirmed its selection, made after assessing progress in political and economic reform, before talks began in November, leaving Slovakia, Romania, Bulgaria, Latvia and Lithuania in the EU's waiting room.

For the EU-5, as they have been called, analysts see bright prospects, despite recent storms in emerging markets further east in Russia and Asia, and more foreign investment.

"These five are in a category of their own. There are some differences in performance but if you are to make a judgment in terms of long-term prospects, the differences between them are secondary," said Mr Stanislaw Gomulka, a reader in economics at the London School of Economic and adviser to the Polish finance ministry.

For the "outs", things could get worse before they get better, analysts say.

"The only country which could belong to the five is possibly Slovakia but all the others do differ," said Mr Gomulka.

Slovakia, the only country excluded from the fast-track EU talks for political failings, elected a new pro-Western government in September and wants a place in the first rank.

"It is not just economic performance so far but also quality of institutions, the quality of laws, of regulations that are likely to have an impact on future performance," Mr Gomulka added.

The European Bank for Reconstruction and Development (EBRD) set up in 1991 to support the transition to a market economy in Eastern Europe and the former Soviet Union, said in November that growth slowed in 1998 as the pace of reform slipped.

"For many countries, progress in transition...has been slower and more erratic than in any year since the fall of the Berlin Wall," it said. "Policy reversals have become more common, partly in response to economic crisis.

In central and Eastern Europe and the Baltic states economic growth would slow to 3. …

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