First the Transition then the Crash

The full title of this book is First the Transition then the crash: Eastern Europe in the 2000s, edited by Gareth Dale and published by Pluto Press in 2011. It looks at the way neoliberal boom-slump cycles have been formative for the countries Dale calls Soviet Central and Eastern Europe  (CEE for short). See the post of 26 March for an overview of Gareth Dale’s work.

The most recent of these cycles was centred on the financial crisis of 2007-08, the sub-prime mortgage crisis starting with the Fannie Mae and Freddie Mac collapses, then merging into the Euro zone crisis after the Greek elections in 2009 and of course still ongoing in 2014, as well as spreading to other countries like Hungary and Slovenia. But even Russia is part of the process and has undergone far-reaching attempts at adaptation. Before looking closer at the individual countries it is helpful to familiarise ourselves with the table of contents and the various author contributions.

But Gareth Dale puts it into the wider perspective of the return of neoliberalism with Thatcherism and Reaganomics. And going back to the 1970s, he shows how the European Union was a major reason for privatisation in the CEE countries:

The EU and the Consolidation of the Neoliberal Project

As Shields discusses (Chapter 8), the EU is the key conduit through which the neoliberal model is being institutionalised throughout Europe, both West and East. The main thrust of the Phare Programme, for example, was to prepare countries for EU membership by insisting on policies of economic deregulation and liberalisation. Dangling the carrot of EU membership, Brussels pushed would be member-states towards a peculiarly radical variant of the neoliberal model. Having to conform to EU rules regarding state aid and competition policy wedded these countries to the liberalisation of trade and investment in a way that made it difficult to acceded to demands for protectionism or retreat. (Dale, 2011 p. 12)

The Phare Programme gets its name from the early years after the collapse of the Soviet Union, as explained in the Wikipedia item on this: Originally created in 1989 as the Poland and Hungary: Assistance for Restructuring their Economies (PHARE) programme, Phare has expanded from Poland and Hungary to currently cover ten countries. It assists the eight of the ten 2004 accession Member States: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia, as well as those countries that acceded in 2007 (Bulgaria and Romania), in a period of massive economic restructuring and political change. Phare means lighthouse in French.

There are chapters on both the original two countries, Poland and Hungary, with different agendas for their own economies and how these became largely determined by the  EU as the starting point of neoliberal expansion eastwards after 1989. There are chapters on other countries as well, including Ukraine and Russia. The impact upon these last two countries have been especially profound. Anyone interested in the EU’s Drang nach Osten should read this book. One of the surprises is that Germany, far from leading on this, has under its current Chancellor Angela Merkel, been most involved in trying to keep a balance between different interests in a growing EU. She has had a good working relationship with Vladimir Putin., though with the growing importance of EU’s Ruling Council signs of strain are beginning to show.

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