Though hard to believe, the area of the world with the largest HIV/AIDS increase is not Africa or Asia, but Central Asia and Europe. According to estimates, 250,000 new cases were reported in the region in 2002, bringing the number of people infected with HIV/AIDS to 1.2 million – a 25 percent increase in just one year. Even though the number of carriers is low (under 1 percent of the population in most countries in the region), this sudden rise has raised serious concern. Most of the reported cases concerned young people, mainly intravenous drug users, while it appears the virus is increasingly being transmitted among heterosexual couples. And more young women are being infected and giving birth to babies carrying the virus. The countries with the most widespread problem in the region are Russia and Ukraine, while a sharp increase in cases has been reported in the Baltic and Caucasus regions. Southeastern Europe reported a total of 16,508 cases, though the numbers vary greatly from one individual country to another. Heterosexual intercourse remains the main cause of infection in Bulgaria, Serbia, Croatia and the Former Yugoslav Republic of Macedonia (FYROM), while in Moldova intravenous drug use is the main culprit. Population shifts in Southeastern Europe, including the movement of people whose jobs include traveling, such as builders, truckdrivers and seamen, are a well-known factor in the spread of the virus. If this epidemic spins out of control, the developmental consequences on Europe and Central Asia may well be disastrous. A recent regional World Bank report, «Averting AIDS Crises in Eastern Europe and Central Asia,» warns that if the HIV epidemic becomes widespread in the region, annual economic growth rates could decline by 0.5 to 1.0 percent and healthcare expenditure could rise by 1-3 percent, while there would be a marked increase in the number of single-child families or families in which the elderly are responsible for taking care of orphans. However, the report also sheds a ray of hope by saying that it is still early enough to avert such a crisis in the region if decisive action is taken. But, the report continues, any action toward the prevention and control of the spread of HIV/AIDS would require strong political will, first to reduce the stigma associated with the HIV/AIDS infection, and secondly to support controversial prevention programs aimed at the hardest-hit groups of society, such as intravenous drug users, sex workers (both men and women) and prison inmates or ex-inmates. More effective blood screening at hospitals, as well as high-quality care for people who are infected, are also important. These support programs should be run by local authorities in cooperation with civil society and private initiatives. A substantial cash injection – raising the budget from approximately $300 million that it is currently to $1.5 billion by 2007 – is a major prerequisite to the success of such initiatives. This increase must include personnel training, diagnosis equipment and public awareness campaigns. The World Bank is already active in the fight against HIV/AIDS in Eastern Europe and Central Asia, through sub-regional and country-specific studies on the extent of the epidemic, as well as through grants and loans for HIV/AIDS control. The World Bank is also cooperating closely with other donors and is a co-sponsor of the United Nations AIDS program (UNAIDS) and a member of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). The most important step now is for each individual government in the region to understand that the problem of HIV/AIDS concerns their own country as well as others and to take action now that the levels of infection are still at a manageable rates. Failure to take decisive action now is sure to have a great cost in the future. (1) Andreas Galanakis is a World Bank adviser for Greece.