4

Europe’s Precarious New Normal

LONDON – A decade ago, ten countries joined the European Union. Today, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia are universally recognized as fully integrated European countries. The extraordinary political transitions set in motion by the fall of the Berlin Wall in 1989, together with the mundane and drawn-out EU accession process that followed, produced this new normal – one essentially free from the political and economic distortions of the Cold War.

Ukraine is now venturing down this path – without the promise of full accession. On this anniversary, with an era of geopolitical tension again descending on the European continent, it is worth reminding ourselves what the new normal has meant for the countries that joined the EU ten years ago – and what it could mean for Ukraine.

Europe’s “missing middle,” gouged out by the Iron Curtain, has been restored. Trade in the region has flourished, naturally gravitating toward the EU, the world’s largest market. Investment has flowed in the opposite direction, from capital-rich to capital-poor countries, as economic theory would predict.

Comparing Poland and Ukraine underscores the difference that EU membership has made. In 1989, Poland and Ukraine had approximately the same standard of living; today, Poles are three times richer. Poland’s income gap with Western Europe today is smaller than it has been at any point since the year 1500.