Eastern Europe: slowing growth?

Something other than Georgia for a change. Via the 8th Circle, here’s a recent article in the Economist about a possible economic downturn in Eastern Europe:

The party is nearly over

After a good run, Eastern Europe faces an economic slowdown

IT HAS gone on splendidly for years, and the party isn’t quite finished yet. For a decade or more eastern Europe has benefited from exceptional (and mostly unforeseen) good fortune. Economic and political stability, including for ten countries membership of the European Union, has boosted investors’ confidence and cut borrowing costs. A big pool of cheap and diligent workers, along with the unleashing of entrepreneurial talents, has produced thriving new private businesses. In most countries, growth rates have been stellar (see chart).

Inevitably, it could not last. Wage costs are creeping up. Labour shortages are biting. Out-of-date infrastructure, such as Poland’s notorious roads, is clogging trade. In several countries inflation is rising. And world markets, both for raising capital and for exporting, are looking tougher.

Well… perhaps. Continue reading

Waiting With Baited Breath?

Will there or won’t there be an eleventh hour agreement on the new EU budget. Tony Blair is clearly burning the midnight oil, but the foreign ministers did not seem to be unduly impressed:

EU foreign ministers’ talks on the 2007-2013 budget ended after less than a minute on Monday (12 December), with the UK set to issue new proposals on Wednesday ahead of Thursday’s summit.

Britain is set today to publish revised proposals designed to broker a deal on a seven-year EU budget, with the new offer still expected to include heavy cuts to funding for eastern Europe. According to the FT:

Tony Blair, British prime minister, is expected to soften his proposals at the EU summit starting in Brussels on Thursday, including giving up more of the UK budget rebate and restoring some of the planned cuts in the new member states.

In pushing for a tighter EU budget for 2007-2013, the UK’s inital offer proposed cuts of almost 10 per cent in funding for eastern Europe in a total budget of €847bn ($1,000bn, £571bn).

Tony has also found a new argument, the cuts in Eastern Europe aren’t as bad as they seem, since these countries don’t know how to spend the money even when they get it (hmmmmm).

Britain claims there is little harm in reducing payments to poorer new members because they are already finding it difficult to spend the much smaller amounts they are being allocated in 2004-2006. But central Europeans say the British analysis is flawed because it looks at figures for this year, which give no indication of how well the billions of euros in structural funds will be spent.

Meantime, in a decision which is getting decidedly less coverage, French foreign minister Philippe Douste-Blazy may have pulled the plug on the enlargement process itself by refusing to approve official EU candidate member status for Macedonia. I’m not sure what this implies. Any comments from our experts out there?

AIDS in Eastern Europe

Actually the Scotsman puts it like this: “Enlargement of the European Union in May will bring the world?s fastest-growing area of HIV infection on to the doorstep of the EU, United Nations experts warned today.”

Which pretty much scandalises me: how can you turn a human tragedy into a eurosceptic thing, for gods sake? The problem isn’t either nearer or farther due to the enlargement process: it is simply there. The background to this is that Peter Piot, executive director of UNAids, the UN body with responsibilities for HIV/Aids, has been speaking at the start of a conference today in Dublin, held at the invitation of the Irish EU presidency. Among the preoccupying facts contained in Piot’s speech: as many as one in 100 adults in the eastern European states and their neighbours Ukraine and Russia are infected with HIV , and the numbers are growing fast.

?Of the states who are to join, the Baltic states particularly are affected. Then you have got at the borders Ukraine and Russia, where 1% of all adults are infected.

?What may be more important is that in 10 years? time, the number of people infected with HIV has multiplied by 50. There are now about 1.5 million people living with HIV on the doorstep of the EU.?

Would it be unduly hard-hearted of me to point out that these countries are already facing the most dramatic population crisis in Europe. ‘Sempre plou sobre mullat’ we say in Catalan (it always rains on the wet). Is there nothing we can get right. Couldn’t we try, just this once.
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