Europe 20 years on
Ashley Mwanza
How promptly the European Union will or will not unite to help its most economically crippled new states in the East is becoming a major political test for the Continent.
Concern is mounting over the spectre of larger political instability, as well as the worries that a prolonged crisis could undercut the East’s emerging middle class. The Baltic States and Hungary, whose liberal Irish-like trade and growth models have collapsed; Latvia went belly up last week and the government has already collapsed amid the economic fallout, they were hit harder than the Czech Republic and Slovakia, which had taken slower growth approaches. Poland and Romania are more protected by their size, economists say, though Poland’s zloty has lost half its value against the euro in recent months.
Eastern Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions. The IMF doesn't have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. It’s only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape.
Twenty years after the fall of the Berlin wall, we witness the rise of nationalism, xenophobia, and right wing extremism in the “new” Europe; those ghosts that have haunted the region historically are back again. But why now?
EU leaders flatly rejected a new multibillion euro bailout for eastern Europe, suggesting that additional aid be given to struggling nations only on a case-by-case basis.
That stance came even as Hungarian Prime Minister Ferenc Gyurcsany warned that the global credit crunch was creating a widening economic chasm in the 27-nation bloc.
In east Europe, things are not looking so bright. The Baltic state of Lithuania, formerly part of the Soviet Union and now a proud member of the European Union, has all but fallen off the map. With its main airline having filed for bankruptcy, it is now impossible to fly direct to the Lithuanian capital, Vilnius, from Brussels or London. The city is this year’s European Capital of Culture – a label that normally draws tourists from all over the continent. This year few people will be visiting.
The global financial crisis is affecting all parts of the world, but arguably it is in central and eastern Europe that the political fallout will be most severe. This year marks the 20th anniversary of the fall of the Berlin Wall, which set Europe on the path to be “whole and free”. But just as that goal began to seem achievable, east and west Europe are being driven apart by the global financial crisis, exposing for all to see the weakness of the European Union. The World Bank president, Robert Zoellick, set out the stakes in an interview with the German newspaper Sueddeutsche Zeitung: “I would consider it an immense tragedy if Europe were to break into two parts again.”
Watch this space for Part 2; the probable solution to this problem...
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