New Europe’s leap into debt

Over the past few years, US President George W. Bush and the rest of the world’s advocates of neo-liberalism have praised the so-called New Europe and jeered at the Old. In their view, the former bravely embraced the free market and sailed with the wind of the future. The Old Europe, governed by the state, sank in the mire. The neo-liberals classified the former socialist countries from the Czech Republic to Ukraine and from Slovakia to Estonia as belonging to the New Europe. The governments of these countries took what appeared to be a giant leap from the Soviet system into the market economy through mass privatizations of all state enterprises and the granting of all manner of tax and administrative privileges to foreign capital investors attracted by their cheap labor force. In international relations, the New Europe supported all American initiatives, beginning with the Iraq war, and granted the use of its territory for US missile and other bases. Unfortunately for them, their governments’ economic policies slavishly emulated the American model, focusing moreover not on its positive factors (such as competitiveness) but all its negative ones from the stock explosion to the property bubble. It neglected the growth of productive forces, so these countries are now begging the International Monetary Fund to bail them out. From the Baltic states to Ukraine, Poland and even Hungary, governments sold out their banks, commercial networks and any healthy businesses they had to foreign capital. No doubt this benefited a large class of middlemen and the old nomenclature but the bulk of the population saw their living standards plummet. But in Old Europe, where the state is the economic and social administrator of the welfare state, the crisis was dealt with effectively, and its citizens sheltered from the onslaught of what French President Nicolas Sarkozy has called savage capitalism.

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