A Third Way Out: The Dilemma of Eastern Europe

A Third Way Out: The Dilemma of Eastern Europe

A long series of questions fuels the debate over sustainable development and the green economy. To name a few: Will the human capacity for innovation be able to offset environmental degradation? Can growth remain an economic priority? Or, conversely, is abandoning growth a viable development path? Amid theories and hypotheticals, the arguments must eventually shift from the abstract arena of general principles and focus on specific problems.

Eastern Europe provides an interesting test case.

After the breakdown of the Soviet Union, most Eastern European countries reoriented their economies toward the European Union (EU). Many of these countries actually joined the EU, overcoming a division rooted in the split of the Roman Empire, 1,500 years prior to the iron curtain. It remains little short of a miracle that the re-unification of Germany and the enlargement of the EU bridged such an ancient divide.

However, this eastward expansion of the EU created a regional mismatch between economic and political institutions. Economic membership requirements—in particular, the Stability and Growth Pact, which placed limits on national debts and deficits—set unrealistic and unachievable expectations on new Eastern members. This mismatch, manifested in today’s Eurozone crisis, now threatens to separate the continent into a strongly competitive Northern economic region and a Southern region that severely lacks competitiveness. Regardless, both regions seem headed for a long period of slow growth and increasing social and environmental problems, while neither region seems capable of real cooperation on key regional or federal decisions like smart grids or research and development priorities.

READ MORE AT THE SOLUTIONS JOURNAL HERE.