November 16, 2015

Eastern Europe, 2015

I spent some time during the summer of 2015 traveling through Eastern Europe. It has changed dramatically since 1991, the year in which the Sowjet Union dissolved and the Warsaw Pact ended. Former Czechoslovakia became two countries, and former Yugoslavia fragmented in 1991/1992 into six states (Bosnia-Herzegovina, Serbia, Montenegro, Macedonia, Croatia, and Slovenia). This led to several wars in the territory of former Yugoslavia, which resulted in the deaths of approximately 140,000 people. Today, the region is again in the spotlight, because it is a transit hub for many refuges from the Syrian war and the unrest in the Middle East. Where is Eastern Europe today, and what is its future? Nobody knows, but some basic knowledge of the area is certainly helpful. In the following I want to share a few interesting facts about the region, as well as some pictures from my trip in August/September 2015.

Sometimes we use the expression “The Balkans” to refer to South-Eastern Europe. The Balkan peninsula stretches south from the Balkan Mountains, and is surrounded by the Adriatic Sea in the West and the Black Sea in the East. The Northern Border is the Danube River, which is the most significant waterway of Europe.

The Balkans were traditionally an area of political and social unrest. It is a place where Greek and Latin cultures mix; Catholic and Orthodox Christianity clashes with the influence of Islam stemming from the centuries-long presence of the Ottoman Empire. Then came the Habsburg  and the Austro-Hungarian Empires, and the First World War started with a shooting in Sarajevo. After the Second World War, the Soviet Union dominated the region, and since 1991, Eastern Europe seeks refuge in the European Union. They all try to modernize, build democratic political structures, and reach a Western-European standard of living. Some of the former Warsaw Pact countries, like Poland or Hungary, have done very well, and there are huge improvements across the whole region. (The exception is Greece, which is struggling to rebuild its economy in order to cope with a crushing debt load.) Some of the underlying and long-standing conflicts however persist and continue to simmer underneath the surface (Kosovo, Bosnia); it remains to be seen if the European Union vision of integrating the Balkans is strong enough to permanently transform the region from a very complex political conflict zone into a region of prosperity and peace.

The following chart summarizes some statistical and economic data for the region. (Here is a link to the financial and social rankings of all sovereign European States.) I include Poland as the northern neighbor, and Austria and Germany as the Western neighbors. Germany is also the biggest economy of Europe, and serves here as a reference point for the small countries that comprise the “Balkans.” The chart was created in October 2015, which means the economic data reflects 2014 numbers. For the total economic output, or Gross Domestic Product (GDP), I use the purchasing power parity (PPP), rather than official exchange rates.

Country  Population GDP (in Billions) GDP per Capita Growth rate (2014)
Germany 80,854,408  $3722.1 $45,900 1.6%
Poland 38,562,189  $954.5 $25,100 3.3%
Austria 8,623,073 $402.42 $47,031 0.4%
Czech Republic 10,644,842  $314.6 $29,900 2%
Slovakia 5,445,027  $152.6 $28,200 2.4%
Hungary 9,897,541  $246.4 $24,900 3.6%
Romania 21,666,350 $392.8 $19,700 2.9%
Bulgaria 7,186,893 $128.6 $17,900 1.7%
Croatia 4,464,844  $88.49 $20,900  -0.4%
Slovenia 2,061,085 $63.60 $30,800 -1.1%
Serbia 7,176,794  $95.49 $13,300 -1.8%
Greece 10,775,643 $284.3 $25,900 0.8%

These numbers show that the development in the region is very uneven. Hungary, with a million people more than Austria, still has only half the GDP per capita. Slovenia, the Czech Republic, and Slowakia have done very well, and Serbia is the poorest country on the list, followed by Bulgaria. The small states further south, Albania, Macedonia, Kosovo, and Montenegro, are also very poor.

Serbia, Bosnia, Albania and Macedonia are not yet members of the 28 Nation EU block. The Monetary Union (Euro-zone: the 19 countries that adopted the Euro as common currency) does not include Hungary, the Czech Republic, Croatia, Romania and Bulgaria. This situation reflects the difficulties Europe faces in its pursuit of integration. The differences in the political structure and leadership of these countries are so vast that the “Pax Europeana” is still very much in question in the Balkans. Europe has to stay engaged and continue to pursue a Pan-European vision for the region. For instance: the integration of Turkey into the European Union seems farther away than ever. Europe still assumes that everyone wants to join, therefore it pursues its expansion by policy autopilot, with a focus on process and less on substance. There is sometimes a tendency in European politics to trade democracy for stability, and to overlook corruption and systemic political failures.

The current European agenda dictates different priorities anyway. Greece requires more bailouts, Great Britain thinks about leaving altogether (Brexit), the refuge crisis rapidly becomes a tidal wave, Islamic terrorism triggers a right-wing reaction, Portugal, Spain, and Italy have problems as well. European skepticism began with an enlargement fatigue a few years ago; today the very idea of a united Europe is under scrutiny in almost every country. Europe is under pressure; Crimea and the Ukraine are almost forgotten conflicts, and other political players are trying to fill the resulting power vacuum: Russia, Turkey, the Gulf countries or China.

What I saw on my trip through Eastern Europe were beautiful towns and landscapes, many signs of economic development, and people who want to celebrate their freedom and the lifestyles that come along with it. They want to leave behind a dark past, but this past is also an extremely rich history.