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Who's Helping?
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18001 |
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Section : |
CURRENT ISSUES
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| Issue
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5 / 1990 |
2,255 Words |
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G. Peter Lauter
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Nineteen eighty-nine will go down in history as the year the nations of Eastern Europe began the long and difficult process of rebuilding their political and economic structures.
The ultimate goal of their efforts is to rejoin the free and prosperous European nations that they left against their will during the second half of the 1940s. And most importantly, the governments of Eastern Europe want to better the lives of their long-suffering peoples. In East Germany's case, this will be achieved through reunification with one of the Western world's most powerful economies - that of the Federal Republic of Germany (FRG). The other nations will have to do it on their own, with assistance from the industrialized West.
The tasks involved are enormous. Never before in history have such disparate nations -ranging from countries that had thriving and competitive prewar economies (for example, Czechoslovakia) to nations that have never known anything but feudalism and communism, such as Romania - tried to undo rapidly the result of decades of single party dictatorship and economic mismanagement. Some, such as Poland, are moving at breakneck speed, while others, such as Hungary, are taking a more cautious approach.
The specific nature of the reforms and the speed with which they will be implemented depend on the extent of previous reforms, current external and domestic economic conditions, and the political courage and leadership ability of the new governments elected during the spring and early summer of 1990. However, Eastern Europe's pressing economic problems differ only in degree.
Most countries, except Czechoslovakia and Romania, are fulfilling their huge external debts with special standby arrangements, such as those provided by the IMF and the World Bank to Poland and Hungary in early 1990. All seek foreign direct investment and a freer flow of technology; they must also obtain access to markets in Western Europe and North America by eliminating quantitative and qualitative restrictions and gaining tariff concessions. Moreover, they must become the beneficiaries of export credit and investment guarantees; join major international organizational such as the IMF and the World Band; and, in some form, become associated with the European Community (EC) and perhaps even the European Free Trade Association (EFTA).
Domestically, Eastern European nations will require assistance in modernizing industry and agriculture. They also need aid in breaking up large monopolistic enterprises, through privatization and other means; in establishing capital markets and a strong banking system; and in rebuilding their infrastructures and badly neglected environments. Most of all, they need modern management skills in all areas of economic activity.
Now that the euphoria over the political changes has subsided, the real work must begin.
The West's role
The return of central and Eastern European nations to the democratic multiparty system, and their difficult transition from centrally planned to market-based competitive economies puts a great responsibility on the industrialized Western democracies in general and on the United States, the EC, and Japan
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