What Eastern Europe Thinks about Globalization
What Eastern Europe Thinks about Globalization

The United Nations Statistics Division classifies these countries as being part of Eastern Europe: Belarus, Bulgaria, Czech Republic, Hungary, Moldova, Poland, Romania, Russia, Slovakia, Ukraine. The Baltic countries: Estonia, Latvia and Lithuania, are also usually considered to be part of Eastern Europe as well. All of these countries share a communist past, aligned with the former Soviet Union. Following the 1989 fall of the Berlin Wall, these countries regained their independence from Russia and started on the path toward a democratic form of government (some more successful than others).

The Czech Republic (1996), Hungary (1994), Poland (1994), Slovakia (1995), Bulgaria (2007), and Romania (1995) have all joined the European Union. Despite joining the EU, many of these countries (such as Hungary) are still considered welfare states (with high-level health and pension benefits offered to its workforce). These countries are often viewed as a source of cheap labor within Europe and the economies of these countries are highly intertwined with the rest of Europe, with high levels of exports to other EU countries, such as Germany. Many Eastern European economies are also dependent on Russia as well.

During the 1990’s, many of these countries went through a period of mass privatization. Hungary and Estonia sold their best companies to foreign capital. Others Eastern European countries issued shares for their public companies and divided the shares amongst the workers, with bonuses for the top executives. The rest of the shares went to the state.1

One sector that did privatize was the banking sector. Large percentages of shares of Eastern European banks (i.e. more than 90 percent shares in Bulgaria, Lithuania, and Czech Republic) were sold to Western European banks.2 FDI to the financial sector grew exponentially after the Eastern European countries joined the EU.

Impact of the Global Financial Crisis
Once considered economic miracles, Eastern Europe has been hit particularly badly by the financial crisis. The Eastern European countries of the EU fueled their growth through high levels of debt, largely financed by Western European banks, which now own nearly $1700 billion dollars of Eastern European loans.3

Consumption in Eastern Europe grew to unsustainable levels, especially in the real estate market, with subprime mortgages financed by Swiss francs and low interest rates. When many Eastern European currencies (such as the Hungarian forint) fell in value, the debt in Swiss francs further exacerbated the financial meltdown. Both Eastern and Western European economies are threatened with the inability of Eastern Europe to repay the debt. Corruption in many Eastern European countries has exacerbated the crisis as well.

Hungary is suffering from decreased factory orders from Germany, $100 billion dollars in external debt, and the increasing costs of its entitlement programs; all of these factors may lead to a default on international loans.4 Hungary’s Prime Minister Ferenc Gyurcsany was forced to resign.

Poland and the Czech Republic have fared relatively better than Hungary and Latvia, both of which have experienced riots and protests by farmers. In 2008, Poland’s economy ranked 22nd in the world with more than $190 billion in exports. Its economy has grown every year since 1992 and even expanded by one percent in the first quarter of 2009.5

Bulgaria has not yet accepted IMF loans, but the newly elected government plans to meet with the IMF soon to assess their situation.

The economies of Hungary, Latvia, Poland, Romania, Serbia and Ukraine were rescued by the IMF, but many feel that it was not enough. The European Union has extended a credit line of $68 billion to Eastern European members of the EU, again many are not sure if this is enough either.6

There is no doubt that Belarus will not come out of the crisis at all if the current economic policy is maintained. The countries which are very competitive with their products, and which streamline their manufacturing processes and management are the ones to come out of the crisis. All this is very archaic in Belarus. Our system of management and enterprises remain from the Soviet times.
Zlotnikau, Leanid. Belarus Live, April 24, 2009.

…The belief, for example, is widespread that, unlike the “evildoer” Moscow, Brussels only wants what is best and sensible for Hungary, from which it logically follows that all its requests must be complied with unquestioningly. This outlook explains why Hungary radically opened its weak domestic manufacturing base to goods from the EU countries years ahead of accession, while other former eastern bloc countries liberalised far more cautiously and protected their own industry better. To the detriment of its industry, Hungary in part voluntarily carried the setting of environmental norms to excess

In the years of stagnation, the overestimation of Brussels led to a false sense of risk. “Nothing can happen to us. We are in the EU. And if anything goes wrong, then the EU will get us out of trouble.” This implicit faith in the Brussels life belt was certainly partly to blame for the fact that Hungary for years – despite knowing better – stubbornly resisted putting its social security system on a financially viable basis better suited to the country’s means.…

There are also likely to be differences in terms of viewing Hungary as a producer of goods or merely as a market for western products. As a result of these different interests it should be understood that no foreign power will help Hungary as optimally as the country can help itself. Even if foreign help looks attractive at first sight and is sold well with slogans such as that of solidarity it always turns out on closer inspection to be not entirely altruistic, rather like overdrafts, which ostensibly help bank customers, but ultimately help banks to do better business.

Mainka, Jan. “Too dependent on others to bring successThe Budapest Times. May 4, 2009

…In October 2008, Ukraine was among the first countries to correctly seek and rapidly receive large scale financial assistance, from the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development as well as scaled up technical assistance from a range of bilateral donors. Since then, some positive steps have been taken, but a lot remains to be done to implement a coherent package to deal with the crisis. At the outset, it is important to get expectations right: Ukraine is likely to suffer a deep recession. Given external imbalances and the lack of access to capital markets muddling through is not a viable strategy…

An anti-crisis action plan for Ukraine needs to contain four key elements: (i) adequate and continued implementation of macroeconomic policies under the program supported by the IMF, (ii) the re-orientation of budget spending towards growth enhancing investments in public infrastructure to support the real sector and employment, coupled with efforts to mobilize resources for the protection of the poor and vulnerable, (iii) a clear strategy to protect depositors and rehabilitate the banking sector, and (iv) reforms to enable business entry and attract private investment…

And – as importantly – Ukraine will need to modernize its public services to become more efficient and to deliver better quality. The structural reform agenda is long. However, in the short-run, a few critical pieces of legislation could go a long way to set the stage for an early recovery. Legislation now before parliament would reduce the number of permits and lower minimum capital requirements for private businesses. The government has also prepared a new law on public procurement that signals Ukraine’s commitment to international standards of competition, whilst saving the state large amounts of money. This legislation should be adopted.

Переименуйте, Автора.“Why Ukraine must act now to implement an anti-crisis plan” Zerkalo Nedeli. # 13 (741). April 13-20, 2009

Technology

Have you ever wondered what that art student you see every day on the tram has in their big portfolio? Or why that man on the bus always has a different hat on? Perhaps you’ve made eye contact several times with that cute businesswoman while waiting for the number 24 tram, even got a smile, but are too shy to say hi?

A new Polish website, Poznaj Pasażera (poznajpasazera.pl), which translates to “Get to know a passenger”, aims to eliminate those social barriers between people who see each other daily on Poland’s public transportation networks…

To use the service, one has to register (for free), putting in their name, a picture, and information regarding their daily commute, including tram or bus number or train route, stops, and times. The service is only available in Polish at the moment, however, so non-Polish speakers will need a friend to guide them through the process.

Once registered, you can click on a route and find every user that might be travelling with you. At the moment, the service is still in its infancy, as when this brave reporter registered, I found only one other traveller sharing the number 2 tram on my daily commute (the 8 was much more popular, with 24 members). Perhaps not surprisingly, most members who used their actual pictures seemed to be in their 20s.

The site allows members to become virtual friends, and send messages to each other – a handy feature to remember next time you’re too shy to say hello to that fellow passenger.

Making Transportation Networks Social.” Krakow Post. June 25, 2009.

Health
A 2004 report on health care systems in Eastern and Central Europe notes that health care has improved since the mid-90’s, but still is below EU standards. There is insufficient focus on prevention and the primary care systems are not fully developed. Low wages and low levels of training for health care professionals are common.7 Corruption and cronyism is unfortunately rather common. Some Eastern European countries offer universal health care; others only provide health care through the workplace. Many hospitals are in disrepair and medicine is unaffordable and in short supply. For example, 82 percent of Hungarians cannot afford even basic healthcare. The wealthy are the only ones who receive adequate care, through private clinics.8

The moment people enter a Romanian hospital, they engage in a complicated system of negotiating bribes…

Depending on the reputation of the hospital doctors, their position in the medical hierarchy and the service provided, bribes to doctors can range from 20 Euro to several thousands of Euro.

When Dan Stoian, a 30 year-old young man, was talking to the surgeon about his upcoming appendicitis operation, the doctor said to him: “The anaesthetist who will be working on you is one of the best in the country – he is a real professional – it would be worth helping him along with about three million RON [about 70 Euro].”

From this, Dan understood that the surgeon should be paid at least twice this figure, even three times as much, if he wanted to be sure the operation would be perfect….
Theoretically, Romania’s healthcare system should be free at the point of access. It is funded by national insurance contributions from salaries. But only 3.8 million people contribute to a system which has to supply medical care for a potential 21 million patients.

Staff are underpaid. An orderly has an average wage of 120 Euro per month, while a nurse is paid about 250 Euro. Romania’s 47,000 public doctors are paid between 220 Euro and 1,700 Euro per month. The low salary is often the justification that doctors and nurses give for taking bribes.…

There is a huge staff shortfall, especially in hospitals. Birea says that 24,000 jobs need to be filled in medical units all across the country. The Government froze all new recruitment in 2009 in the public system, including in healthcare, due to the financial crisis. “In the last years many doctors and nurses left Romania for much better salaries abroad,” Birea says. In the rest of the EU there is also a huge staff shortage and Romanian doctors tend to go to France, while its nurses opt for Italy, but there are few countries with trained doctors willing to fill the gap in Romania.

The best doctors and nurses are also attracted to the private sector. A rising number of private medical units have taken some of the best staff from the public system, especially those doctors and nurses who are not willing to enter into cash negotiations with patients.

Last month the Government passed a radical reform programme to shake up the Romanian medical system. This includes the concept of patient payments. A fixed amount of medical services will be free at the point of access and patients will have to pay further costs for additional services.

A commission is currently outlining the exact structure of what will be free and what will require payment, with provisions and exemptions for low income patients, pensioners and children. This should be finalised by 1 September 2009.

The hope is that such a system will migrate bribe-taking from under the counter to a transparent system in which the patient is given a receipt for every treatment they purchase.

Paying the price for healthcare.” The Diplomat. Vol 5, No. 6. July 2009

Culture

…The Slovak parliament passed the long-discussed Language Act – proposed by Culture Minister Marek Maďarič – on June 30. The amended law introduces fines of up to €5,000 for the use of incorrect Slovak from September 2009, and will also enable stricter official supervision of the use of ‘correct’ Slovak.

According to the law, doctors, nurses and caretakers in health-care and social facilities in municipalities in which significant ethnic minorities live may speak with patients and clients in the language of those minorities. If texts on memorials and plaques are written in both the state language and a foreign language, the foreign inscription may not be bigger than the inscription in the state language…

The Organisation for Security and Co-operation in Europe (OSCE) Representative on Freedom of the Media Miklós Haraszti had earlier signalled to the Slovak authorities his concern over the requirement to broadcast local and regional minority language programmes in Slovak as well, as this would be technically and financially prohibitive and therefore would restrict broadcasting pluralism, he stated in his regular report to the OSCE’s Permanent Council. His office will continue monitoring the ministry’s supervising practice for compatibility with media freedom requirements…

The opposition Hungarian Coalition Party (SMK) has rejected the law, describing it as one that puts citizens who belong to a minority at a disadvantage and violates the principle of equality. According to Agnes Biró, a deputy for the SMK, there are many worrying issues about the act, among them the possibility that the fines it introduces will discourage people from using minority languages and restrict the legitimate activities of national minorities…

Several state officials from neighbouring Hungary have made statements condemning the Slovak Language Act, saying that its passing will have a negative impact on future bilateral meetings. Approximately 10 percent of Slovakia’s citizens speak Hungarian as their first language.

Stanková, Michaela. “Slovakia and Hungary clash again over language.” The Slovak Spectator. July 8, 2009.

Ethnic festivals are very popular all over the world — they always attract a huge number of music lovers. Ukraine is no exception. But in our country they also have a political subtext. For, unfortunately, there are very few places where Ukrainians can feel their national identity…

Kyiv’s Independence Square (the Maidan) used to be this kind of place, but now, after years of dramatic disillusions, it has given way to the Dreamland fest…

This year’s festival was held under the slogan “Dreamland is clean land.” There were such novelties as an eco-lesson from Ukrainian stars and literature of Ukraine’s ethnic communities, as well as the already traditional master classes, the best embroidered shirt competition, a book fair, and many other things…

Dmytro KAPRANOV, organizer of Dreamland’s Ukrainian book fair:
This year Dreamland hosted for the first time a literary festival of Ukraine’s ethnic communities. Whoever reads newspapers or watches television might well think that only Ukrainians and Russians live here, which is wrong. We are a multiethnic and multicultural country, and some ethnic groups that reside in Ukraine are unique. They have no statehood of their own and live in this country only. These are, first of all, Crimean Tatars and Gagauzes.

PRASOL, Viktoria, Anna SLIESARIEVA, and Anna SHKILNA, The Day’s Summer School of Journalism. “Ukraine turns into a dreamland.” THE DAY WEEKLY DIGEST. No. 9. July 7, 2009.

Ukrainian Music:


Environment

Since joining the European Union, Romania has needed to grow a recycling industry from scratch. Private investors have been quick off the mark and now the speed of lawmaking on recycling is finding it hard to keep up with the maturity of the industry.

EU targets on recycling also need to reflect the reality of a country, such as Romania, which still needs to make major developments in changing the mentality of its people and authorities before it can create a fully recyclable society.

There are also gaps in the recycling supply chain. There is a lack of selective collection of waste due to poor legislation and the absence of a proper waste management infrastructure.

Recycling powers ahead of the law.” The Diplomat. Vol. 5, No 6. June 2009

Trafficking of Women
One of the problems faced by many Eastern European countries is the trafficking of women. International crime syndicates took advantage of the porous borders and the lack of domestic jobs and general poverty, especially in the small towns. Law enforcement was not properly trained to handle the situation and was amenable to bribes.

There is also a strong demand for the prostitutes in Western Europe. For example, in the Netherlands (where prostitution is legal), the $200 million industry supports 30,000 prostitutes, 70 percent of whom are foreigners, of which reportedly 40-80 percent are forced or coerced into prostitution.9 Some European countries, such as Sweden, are trying to address this problem by redefining prostitution as a form of violence against women; Sweden has seen an 80 percent reduction of street prostitution since redefining the act.10

The following 12 states (including many Eastern European countries): Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Hungary, Macedonia, Moldova, Romania, Serbia and Montenegro, Slovenia, Turkey) developed a new strategy to combat trafficking and organized crime. In November 2000, these countries created the SECI Center, whose mission was to “to support common efforts of the member states to combat crime.”11

Their name is Ana, Maria, Viorica and Natalia. For a decade, Moldova’s villages and cities are aware that these girls have been taken abroad by some men, where something “bad” happened to them. That is why everyone points to them. Ana, Maria, Viorica and Natalia would tell the state authorities about Vasile, Ion, Serghei and Alexei, who falsified their identity documents and took them at night in the trunk across the border. But this requires judicial, medical, psychological services and centres that would provide shelter to them. At the same time, Vasile, Ion, Serghei and Alexei would say how much and to whom they’ve paid for false documents to cross the borders, but since Ana and Maria keep silence, the accomplice clerks remain anonymous. Moldova is a leader in human trafficking and the last in fighting it, by supporting the victims

The psychologist of IMO’s rehabilitation Center, Lilia Gorceag, states that, according to statistics, single mothers, who are hit from all sides usually become victims of human trafficking phenomenon. On the one hand, they were rejected by their husbands and often parents. On the other hand, the social system does not offer too much support when they end up raising their children on their own. …

Another problem mentioned by the NGOs fighting human trafficking is the lack of efforts made by the Government to assist and protect the victims. Article 2 from the 2003 Criminal Code said that “the victims must receive compensation for the legal expenses and the damages caused by the illicit actions of the prosecution authorities must be fixed”. In July 2006 this norm was cancelled and the victim’s damage had to be covered from trafficker’s income. According to Ion Vazdoaga, the head of the Center for fighting women trafficking, the victim doesn’t have the same rights in the legal system as the trafficker does…The state does not have a victims’ data base and does not allocate any money for their social and medical rehabilitation, Vazdoaga added. (Ion Vazdoaga, the head of the Center for fighting women trafficking)…

Financing the activities for fighting human trafficking is done by foreign donors, international organizations and the Governments of other countries. Until this day, the state Budget does not include any special expenses for fighting human trafficking…
According to the received information, in the CIS area, the Republic of Moldova is the country with the highest taxes for organizing work migration for citizens, and 20% of the sums collected by traffickers from illegal immigrants are transmitted to some co-workers of the Center for Fighting Human Trafficking”, a press release delivered by the
Moldovan Presidency at the end of June mentions.

Radu, Alina. “Clerks involved in women trafficking – state secret” Ziarul de Garda.August 8, 2008

Energy
Russia supplies energy to Eastern Europe (and the rest of Europe as well). In January 2009, Russia and the Ukraine disagreed on the price of gas. Ukraine failed to settle a $600 million late fee demanded by Russia. Russia further accused Ukraine of siphoning off large quantities of gas meant for other European customers (which Ukraine denies). Ukraine provides gas lines to many European countries. Many lost access to energy during the cold winter months, including Bulgaria which lost access to 92 percent of its gas routes. The stand-off was eventually solved when Ukraine signed a new contract with Russia’s Gazprom to pay the European market price.12

Amidst the tension and insecurity that spread throughout Eastern and Central Europe during the recently resolved Russian-Ukrainian gas dispute, Poland proved itself as one of the countries less vulnerable to Russia’s economic and political demonstration of power.

Though also having reported substantial drops in gas supplies, Poland was well prepared and protected, as it continued to receive 84 percent of its gas imports from Russia via the Yamal-Europe pipeline running through Belarus….

Poland managed to compensate for the decline by utilising stored gas that had been accumulated beforehand. “Since Russia notified us in advance about possible disturbances in gas deliveries, making use of an early warning mechanism, we were able to conserve supplies. Thanks to this, at the start of the 2009, our storage facilities were filled at around 90 percent. At the moment their level is still over 65 percent,” Zakrzewska stated.

Krupski, Adelina. “Gas Wars: Russia Strikes Back but Poland Escapes.” Krakow Post. February 5, 2009

Human Rights

One of the human rights concerns that affects multiple Eastern European countries is the treatment of Roma community, who suffer from mass discrimination and are often denied health care, housing, employment, and education.

In the Czech Republic, Roma children are still placed in schools for children with mental disabilities, despite a ruling by the European Court of Human Rights in November 2007. In Hungary, there has been a rise of anti-Roma attacks. In 2008 there were 16 incidents involving weapons in Roma homes, which lead to four deaths.

In Romania, Roma families were evicted from their homes and moved into a fenced-off field, with barracks that provide insufficient protection from the heat and cold. The children are bused to Roma-only primary schools. This supposedly temporary situation has already lasted four years. Discrimination complaints have been filed to the police. Despite media coverage, there has been no change.13

To combat discrimination against the Romas, the Decade of Roma Inclusion 2005–2015, was initiated by European governments, the World Bank and the Open Society Foundation. The following 12 countries have joined the initiative: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Macedonia, Montenegro, Romania, Serbia, Slovakia and Spain. Each country has to create a national Decade Action Plan to address problem areas.14


1 Samary, Catherine. “Towards a Western/Eastern Europe Banking and Social Tsunami.” May 12, 2009.
2 Ibid.
3 Ibid.
4 Fleishman, Jeffery. “In Levi factory town in Hungary, promise of globalization fades.” LA Times. March 29, 2009.
5 “Poland’s economy booming 20 years after free elections.” CNN. June 5, 2009.
6 Fleishman, Jeffery. “In Levi factory town in Hungary, promise of globalization fades.” LA Times. March 29, 2009.
7 “Health care systems in Central and Eastern Europe.” EurActiv. April 21, 2004.
8 Vaknin, Sam. “The Dying Breed – Healthcare in Eastern Europe.”
9 Gunde, Richard. “The Dark Side of Globalization: Trafficking & Transborder Crime to, through, and from Eastern Europe.”
10 Ibid.
11 Ibid.
12 Adelina Krupski. “Gas Wars: Russia Strikes Back but Poland Escapes.” Krakow Times. February 5, 2009

13 “Europe’s Roma community still facing massive discrimination.” Amnesty International. April 8, 2009.
14 Stanková, Michaela. “Decade of Roma Inclusion now led by Slovakia.” The Slovak Spectator. July 6, 2009.

* Pictures: http://www.uknetguide.co.uk/Holiday-Guides/Eastern-Europe/Lithuania/, http://www.flickr.com/photos/wiseleo/2911602179/

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