The East European Economy in Context

Communism and Transition

David Turnock

• Publisher: Routledge
• Year: 2003
• Print ISBN:
  9780415086264
• eBook ISBN:
  9781134884278
• Topic: History
• Subtopic: World History
• Index: History

Since 1989 the former communist countries of Eastern Europe have witnessed a profound and dramatic upheaval. The economic coherence of this region, formerly maintained through the adoption of the Soviet system of government, has fractured. In The East European Economy in Context: Communism and Transition, David Turnock examines the transition from communist to free-market economies, both within and between the states of Eastern Europe. As well as containing an informative survey of the impact of communism, The East European Economy in Context provides
* Political profiles of individual countries
* A clear study of the contrasts between northern and balkan groups
* Summaries of regional variations in the transition process
* An exploration of the new state structures and resources
* Discussion of political stability, inter-ethnic tensions and progress in economic change

1
INTRODUCTION
Eastern Europe to 1945

This book deals with the former communist countries of Eastern Europe apart from the successor states of the Former Soviet Union (FSU). A total of thirteen states (including the eastern part of the now reunified Germany) embrace an area of 1.27mn.sq.km. and a population of 137.8mn. (1985) and with an overall density of 102 persons/sq.km. respectively. The maximum longitudinal spread of Eastern Europe is almost twenty degrees (about 1,300km.) and the distance from the Italian/Slovenian border to the Black Sea at 45 degrees north is some 1, 200km. However, at its narrowest (in Hungary) the east-west extent is only 360km. North-south distances tend to be greater, from 40 degrees north in southern Albania to 55 degrees in northern Poland, a distance of some 1,650km. As was also the case before 1989, the region borders on Austria, Greece, Italy and Turkey. However, the unification of Germany means that the northwestern limits are now expressed through the boundaries of the ‘New Lander’, comprising the Former German Democratic Republic (FGDR). In the east, the breakup of the FSU means that Eastern Europe’s neighbours are Belarus, Lithuania and Ukraine, along with Russia by virtue of the Kaliningrad enclave. (See map 1.1.)

Eastern Europe may be regarded as a region with some coherence arising from the adoption, by monopoly communist parties, of elements of the former Soviet system of government, including socio-economic evolution through development of a command economy guided by central planning. There was some relaxation after Stalin’s death in 1953 through Red Army withdrawals from the Balkans, though not from FGDR and countries needed for transit purposes. Maintenance of communist power was guaranteed by the Brezhnev doctrine which legitimised Warsaw Pact intervention in Former Czechoslovakia (FCSFR) in 1968 on the grounds that a threat to the system in one country was a challenge to the alliance as a whole. It was only the declaration by Mikhail Gorbachev (leader of the FSU in the late 1980s) that Eastern Europe was independent which led to radical change throughout Eastern Europe in 1989. It seems that a phase of world war, which has dominated the twentieth century, has at last come to a close, thanks primarily to the Russian decision to abandon a system which arose primarily as a response to the desperate plight of the Russian Empire during the First World War: a more authoritarian regime to draw the ethnic groups together and to provide for the development of priority sectors.

Map 1.1 Countries of Eastern Europe 1989 and 1996, showing capital cities and neighbouring states

Revolution has robbed Eastern Europe of part of its unity and without the FSU’s power to impose stability the future of the region becomes uncertain. However, the former ‘[state-] socialist countries’ still have a common interest in negotiating the transition to a market economy and integrating more closely with Western Europe and the European Union (EU). In this sense Eastern Europe is a region of great importance for the socio-economic progress and political cohesion of the continent (Michalak and Gibb 1992). It is very much in the interest of the EU that there should be stability following the adoption of pluralist systems of government and some major changes in territorial arrangements through the reunification of Germany and the demise of Eastern Europe’s two federations: FCSFR and the Former Federal Republic of Yugoslavia (FFRY). Further changes cannot be ruled out, such as the union between Romania and Moldova which once seemed a clear possibility. But it is important that disputes are resolved by peaceful means and ethnic violence is avoided.

The renewal of traditional links with Austria, Germany and Italy may restore credibility to the notion of ‘Central Europe’ or ‘Mitteleuropa’ as a region of cultural and ethnic diversity in which Germans (and to a lesser extent Italians) have played a key role in the spread of technology and the growth of industry and trade (Basch 1944). At the same time the tension between Germany and Russia points to the idea of a Marchland Europe (balanced historically between the Habsburg and Prussian states in the West and the eastern empires of Byzantium, the Ottoman Turks and Russia). Independent Eastern Europe disappeared, apart from a few limited instances where imperial power was exerted indirectly through suzerainty (Palmer 1970). Instead there was colonialism, with much instability and ethnic diversity where imperial frontiers were in state-of-flux boundary changes. Historic rivalries still complicate relations, most clearly since the demise of FFRY which has thrown into sharp focus the conflicting aspirations of the leading ethnic groups.

Consideration of the political map for the middle decades of the nineteenth century would show Eastern Europe falling to the Habsburg, Ottoman and Russian empires along with the German states, among which Prussia was gaining ascendancy. This imperial framework had its origins in the medieval period although significant frontier modifications were made with the gains from the Ottoman Empire by the Habsburg Empire in Croatia, Hungary, Transylvania (and later Bosnia-Hercegovina) and also by the Russian Empire in Bessarabia. Perspectives extending further back into history would cover the dynasticstates of the early medieval period reflecting the ethnic quilt arising out of the Dark Age migrations and the potential for autonomy in the marchlands between Russia and the Byzantine and Holy Roman empires. They would also include both the ultimate imperial precedent in the shape of the Roman Empire and an inspiration for nationhood through the romanisation of Iron Age tribes, a process which provides a cultural foundation for the Albanian and Romanian states.

Eastern Europe’s political history can only be described as tumultuous because state formation has been seen as a highly competitve business in which the more successful systems have been able to exert and maintain power over large areas of land. Coercive policies have required economic strength linked with the accumulation of wealth by urban-based merchants and manufacturers. It was Eastern Europe’s fate for the medieval dynastic states to be eliminated by strong imperial systems with economic cores that lay outside the region, apart from the Czech Lands and Saxony which played important roles in the growth of the German and Habsburg empires respectively. In the nineteenth century it became common for cohesion to be fostered by cultural programmes based on nationalism as well as religion, but the ‘state-led nationalism’ of Western Europe contrasted with the ‘state-seeking nationalism’ in Eastern Europe, where the contraction of the Ottoman Empire led to ‘Balkanisation’ and a tier of new nation states, and the Habsburgs agreed to a share of power between Budapest and Vienna (Tilly 1989). The process was then completed by self-determination at the end of the First World War which left many Germans stranded by the collapse of the imperial structures (Jaworski 1991).

The Western powers have generally supported self-determination in Eastern Europe but their ideological solidarity has been compromised by the need to coexist with other great powers. The British geographer H.J.Mackinder appreciated the strategic importance of Eastern Europe to both Germany (seeking eastward expansion into the Eurasian heartland) and Russia (looking for security on her western frontier). He advocated a security system for the new democracies of Eastern Europe to be supported by the West, but this was only achieved to the limited extent of the “Little Entente” in view of major foreign policy differences between the East European states themselves (Mackinder 1962). By the late 1930s Germany was casting a shadow, and substantial territorial changes were made to create a Greater Germany (Grossdeutschland) and a larger stake in the region for Bulgaria, Hungary and Italy. Measures were taken to simplify the ethnic structure through resettlement (including population exchanges). Then, in 1945, the FSU’s security requirements meant that the eastern territories of FCSFR, Poland and Romania were lost (with compensation for Poland at Germany’s expense) while several changes were made in border regions: minor transfers in the cases of the Austrian-Hungarian and FCSFR-Polish frontiers (in the Burgenland and Klodzko areas respectively) but more substantial in the case of the Italian-FFRY border, thereby reflecting the political strength of the Yugoslav idea under Tito’s leadership at the time.

A German geographer (J.Partsch) once suggested that Central Europe could be recognised in landscape terms through the juxtaposition of ‘Alpine’ mountains (like the Carpathians and Dinaric Alps), ‘Hercynian chains’ (referring to the broken hill and plateau country of the Czech Lands and its border regions) and major lowlands like the North European, Hungarian/ Pannonian and Romanian/Wallachian plains). These landscapes have much significance for human geography. The concept of ‘ecumene’ (a nursery for the nation state) could be considered with reference to Bohemia, Kosovo or Transylvania. There are complementary resource regions: the mountains are important for pastoralism and have a long history of mining activity. Meanwhile, in addition to their potential for intensive agriculture, the lowlands have yielded several important minerals in recent times including oil, gas and lignite, as well as copper and sulphur (Pearton 1971). Moreover, the growth market-oriented manufacturing in the capital cities and the expansion of the ports on the Adriatic, Baltic and Black Seas has also helped to reverse this historic imbalance.

There are significant constraints in the mountains however. Just over one-fifth of the land is higher than 500m. and subsistence farmers must concentrate on the hardiest cereals, such as rye in the Carpathians. But in a commercial context the mountain grazings provide a sound base for pastoralism to complement the arable emphasis of the low ground. High sunshine levels in the southern mountains enhance the potential and in the past remarkably large agricultural communities were supported, although remoteness from marauding armies and feudalising landowners were also significant factors, as was the high incidence of disease in the lowlands in early modern times. The mountains are still heavily forested and the woodlands are very important commercially, for exports of raw timber have been diversified by other products such as board, plywood and furniture requiring a greater degree of processing. Meanwhile the scenic attractions of the mountains with cultural landscapes indicative of settlement continuity and pluriactivity have become important resources for tourism. Within the major structures like the Carpathians there are distinct local characteristics such as the inselberg-like hills in the Jelenia Gora basin of southwest Poland—the result of subtropical morphogenesis going back to the Middle Miocene (Migon 1992).

The lowland areas, particularly the North European Plain and the plains associated with the Danube (the Pannonian Plain—known to Hungarians as Nagyalfold—and the Lower Danube or Wallachian Plain), comprise fertile land interspersed with less tractable sands. The latter have often supported only poor grazing (the puszta of Hungary) or woodland, although more recently the supply of irrigation water has opened the way to more intensive use. The southern lands have the advantage of high summer temperatures (all the low ground south of Budapest in Hungary and Iasi in Romania has a mean July temperature exceeding 20°C). However, conditions are very dry in the far southeastern parts of Eastern Europe: Moldavia, Dobrogea and eastern Wallachia (Baragan steppe) have an annual rainfall below 50cm. and irrigation is therefore a critical matter. In the past much of the land was used to rear livestock and grow cereals for export, but the growth of population and industry has meant that more land is needed to feed the population and to generate agricultural raw materials. The trade surplus has been turned into a deficit and by the 1980s there was a considerable net import of cereals. On the farms cereal crops are complemented by sugar beet and fodder, while additional areas are devoted to textile crops, oil plants such as sunflowers, tobacco and a range of medicinal and aromatic plants. There are also vegetable gardens, orchards and vineyards with considerable export potential. Livestock rearing has become more intensive (contributing to the cereal deficit) since meat production is an important indicator of rising living standards. Fish are also more important: they are caught by trawlers in distant waters to supplement the traditional fisheries along the coasts, the inland rivers (the Danube delta and floodplain lakes) and fish-ponds which are particularly numerous in FCSFR.

However, the development of the region’s resources has not been straightforward (Bierman and Laboda 1992; Pounds 1969). Eastern Europe was certainly congenial for settlement and agriculture in prehistoric times, for the relatively warm and dry Balkan lands played their part in the diffusion of crops from the Middle East to Western Europe (Turnock 1988). Prehistoric settlers discovered that the Danube and the Morava-Vardar corridors gave easy access to the better farming lands, and forest was cleared, especially on the light loess soils. The amber routes exemplify the transit role of Eastern Europe, transmitting cultural influences from the Balkans to the North European Plain. The northern coniferous and deciduous woodlands posed a severe challenge, but nevertheless, German and Slav colonists initiated economic developments which eclipsed the Balkans in medieval and modern times. With access provided by such rivers as the Elbe, Oder and Vistula, surpluses could be marketed through the Hanseatic trading system. Yet Eastern Europe lost out when the historic trading axis from the Mediterranean to the East was eclipsed by the great discoveries which stimulated economic advance and technological innovation in Western Europe. During the Industrial Revolution with its coal-based technology, it was impossible to escape from a largely colonial relationship with the West because few large industrial regions were developed (Pounds 1958a, 1958b). Meanwhile, imperial structures imposed severe constraints on enterprise; and wars brought enormous losses and required repeated infrastructural overhauls (Berend and Ranki 1979).

It is usual to divide the region into two halves: a northern tier comprising the relatively well-developed states of FCSFR, Hungary and Poland with considerable democratic experience; and a southern group to take in the FFRY along with Albania, Bulgaria and Romania (Turnock 1989). In the north there was considerable involvement with the core areas of the Habsburg and Prussian/ German states (Berend and Ranki 1974a). The Habsburgs kept Hungary in a state of feudal subjection as the empire’s breadbasket (for the warmth of the Great Plain gives Hungary an agricultural potential comparable with that of the Balkan states) and industrialisation took off only after the famous compromise Ausgleich in 1867 (Berend and Ranki 1974b); but the Czech Lands were developed as the main industrial base (Kaser and Radice 1986). Saxony played a similar role in the German Lands with the great trading emporium at Leipzig and a major centre of manufacturing in Chemnitz, where the textile industries of the Erzgebirge were consolidated on the basis of cotton manufacture and related engineering industries during the nineteenth century. Use of cotton (initially obtained from Macedonia) and production of machines by firms like Richard Hartmann made Chemnitz the ‘Manchester of Saxony’. Basic to all this industrial activity was the Elbe waterway and the web of railways which was plainly taking shape from the 1850s on. There were lines to Berlin (via Elsterwerda and Juterbog) as well as a coal supply route from Lugau and Zwickau, and railways advanced up the Erzgebirge valleys to strengthen links with the immediate hinterland. German enterprise extended to Silesia and was drawn over the border into Russian Poland through the concessionary regime established in the city of Lodz.

Meanwhile the Balkans were relatively remote, with a long sea journey required to reach the Danube delta, while penetration from the Adriatic was constrained by the towering Dinaric Alps. Moreover, the trading monopoly maintained by the Ottoman authorities limited the options available until well into the nineteenth century (Carter 1977). The system was initially efficient, with a command economy maintained through administrative and military hierarchies working through a market system of towns interconnected by trading caravans (Stoianovitch 1989). But it failed to modernise in the era of factory industry and growth was stifled as intermediaries intercepted the flow of wealth heading for Istanbul. The Ottoman administration had little to offer the Christian peoples of the Balkans at a time of increasing national awareness (Sugar 1977). It was only after the Treaty of Adrianople (1828) that the Danubian principalities of Moldavia and Wallachia could begin to trade with Western Europe through the ports of Braila, Galati and (after 1878) Constanta. The Balkan states started to gain their independence from the Ottoman Empire in the late nineteenth century and the process was completed by the creation of Albania in 1912 (Augustinos 1991). Romania became one of the world’s leading cereal exporters with rail as well as sea transport available. However, despite the proximity of the Danube the lack of irrigation made cereal farming vulnerable to severe summer drought. Feudal obligations were swept away but the peasants remained dependent on the large landowners w...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• TABLES
• MAPS
• ABBREVIATIONS
• 1: INTRODUCTION EASTERN EUROPE TO 1945
• 2: EASTERN EUROPE UNDER COMMUNISM
• 3: THE TRANSITION POLITICAL AND SOCIAL ISSUES
• 4: TRANSITION TO A MARKET ECONOMY
• 5: NATIONAL PROFILES NORTHERN COUNTRIES
• 6: NATIONAL PROFILES BALKAN COUNTRIES
• 7: RESTRUCTURING IN AGRICULTURE AND INDUSTRY
• 8: PROSPECTS FOR THE REGIONS OF EASTERN EUROPE
• BIBLIOGRAPHY