25 years after the fall of the Iron Curtain The state of integration of East and West in the European Union Research and Innovation EUROPEAN COMMISSION Directorate-General for Research & Innovation Directorate B — European Research Area Unit B.6. — Reflective Societies Contact: Zoltán Krasznai European Commission 1049 Bruxelles/Brussel BELGIQUE/BELGIË E-mail: [email protected] EUROPEAN COMMISSION 25 years after the fall of the Iron Curtain The state of integration of East and West in the European Union Péter Balázs András Bozóki Ştefan Catrina Adelina Gotseva Julius Horvath Donika Limani Bogdan Radu Ágnes Simon Áron Szele Zselyke Tófalvi Krisztina Perlaky-Tóth Directorate-General for Research and Innovation 2014 Inclusive, Innovative and Reflective Societies EUR 26678 EN Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE Neither the European Commission nor any person acting on behalf of the Commission is re- sponsible for the use which might be made of the following information. The views expressed in this publication are the sole responsibility of the author and do not necessarily reflect the views of the European Commission. More information on the European Union is available on the Internet (http://europa.eu). Luxembourg: Publications Office of the European Union, 2014 ISBN 978-92-79-38535-3 doi:10.2777/75613 ISSN: 1018-5593 © European Union, 2015 Reproduction is authorised provided the source is acknowledged Images © Éva Széll, 2014 3 Acknowledgements This policy review was drafted by Professor Péter Balázs and his colleagues of the Central European University (CEU), Budapest. Péter Balázs is the director of the Center for European Enlargement Studies at CEU. He was the Government Representative of Hungary in the Euro- pean Convention drafting the Constitutional Treaty which became later, after several modi- fications, the Lisbon Treaty. In 2004 he became the first Hungarian Member of the European Commission responsible for regional policy. He is also a former Foreign Minister of Hungary (2009-2010). In order to complete this work the authors reviewed the proceedings of five research projects about the transition and EU integration of former socialist Member States funded by the European Union under the seventh Framework Programme along with a large amount of re- lated further international literature. On behalf of the European Commission, Directorate-General for Research and Innovation, the work was inspired and supervised by Philippe Keraudren, acting head of the unit ‘Reflective Societies’. Zoltán Krasznai, policy officer of the ‘Reflective Societies’ unit contributed with co- ordination, proofreading and advice, while Catherine Lemaire provided editorial assistance. Our heartfelt thanks go to Éva Széll whose photographs illustrate this publication as a courtesy. Contents Acknowledgements ............................................................................................................... 3 Introduction ............................................................................................................................ 7 Chapter 1: Geo-historical overview ................................................................................. 11 A legacy of foreign domination ................................................................................................................12 1989 and its aftermath ..............................................................................................................................13 Timeline of events in 1989 .......................................................................................................................14 Events leading to the dissolution of Yugoslavia .................................................................................16 Competing narratives on the East-West divide in Europe ................................................................16 Historical reconciliations, but some tensions still remain ................................................................18 Regional initiatives ......................................................................................................................................19 The road towards the EU ............................................................................................................................20 Conclusion ......................................................................................................................................................21 Chapter 2: Political transition and the state of democracy in East Central Europe: between hopes and disillusions................................................ 25 State of democracy .....................................................................................................................................26 Constitutional order and institutional framework ...............................................................................28 Elections, the electoral process and participation ..............................................................................29 Party systems ................................................................................................................................................32 Civil society ....................................................................................................................................................33 Civil liberties and human rights ...............................................................................................................33 Nationalism and the elitist-populist pendulum ...................................................................................34 Minorities ........................................................................................................................................................35 Corruption and state capture ....................................................................................................................37 Relations with and position within the European Union: success and limits of the Visegrád process ...................................................................................................................................38 Conclusion ......................................................................................................................................................40 Chapter 3: Economics in Central Eastern Europe: the mixed results of the transition to market economies ................................................................................ 41 From socialist to market economy ..........................................................................................................42 The first years after the break-up of the Central and Eastern European socialist system: between ‘shock therapy’ and gradual sequencing of reforms .........................................................42 Catching-up with Western Europe: 1995-2007 ...................................................................................44 Productivity gains .........................................................................................................................................45 Dependence on foreign direct investments (FDI) ................................................................................46 The slow progress of innovation ..............................................................................................................48 High rates of unemployment, especially among the young .............................................................50 Vulnerability of the CEE economic model during the recent crisis ................................................52 Modernising agriculture ..............................................................................................................................54 CEE countries and the euro currency ......................................................................................................56 Broader political economy characterisation .........................................................................................56 Conclusion ......................................................................................................................................................57 Chapter 4: The unequal costs of the social transition ............................................... 59 Inequality and poverty ................................................................................................................................60 Changes in wealth ........................................................................................................................................65 The mixed picture of migration ................................................................................................................65 Public health under pressure ....................................................................................................................67 Public education ...........................................................................................................................................68 Pension systems: a hectic road ................................................................................................................70 Conclusion