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Sunday 23 November 2014

25 years of transition in Central and Eastern Europe and its impact on the economy

Jonathan Scheele (SEESOX Associate; Senior Member, St Antony's College, Oxford)

On 18 November, Rainer Muenz, Head of Research at Erste Bank, Vienna, gave a seminar, convened jointly by ESC and SEESOX, “On the doorstep between Brussels and Moscow”, looking at the economic prospects for the countries of Central and Eastern Europe – new Member States and candidates. He delivered a master class in clarity and concision, marshalling complex data sets to render his thinking easily accessible to all.

He began by remarking that there was snow on economic expectations – how should we interpret this? His conclusion was far from reassuring. The CEE countries could, pre-crisis, expect their growth differential against western Europe to allow their GDP to converge to the EU average within two to three generations; post-crisis, with a much lower growth differential on current trends, convergence to the EU average will take a lifetime.

The crisis in Greece and Southern Europe: A Whodunnit

David Madden (SEESOX Associate; Senior Member, St Antony's College, Oxford)

Professor Loukas Tsoukalis spoke on this subject at SEESOX on 14 November. He spoke mainly about Greece as a catalyst in the crisis: and also about Italy, Spain and Portugal (and Ireland as an honorary member of the Southern European group): less about Cyprus, where the main problem had been over-exposure of Cypriot banks to Greek government debt.

Although a whodunnit, there was not yet a happy ending in sight. The worst economic crisis since WW2 would continue to have profound effects, and shake integration projects. The series of matryoshka dolls got uglier: the bursting of the biggest international bubble since 1929, a systemic crisis of the Eurozone (a currency without a state), and national failures of unsustainable economic models and dysfunctional political systems.