New Europe Catches Old Europe’s Cold
As governments across Western Europe began bailing out banks and their depositors, Eastern Europeans watched nervously, unsure about what the global financial storm would mean for them. Now that the storm has hit them, the fragile bonds of European solidarity are being tested.
Subscribe to Project Syndicate
Enjoy unlimited access to the ideas and opinions of the world's leading thinkers, including weekly long reads, book reviews, topical collections, and interviews; The Year Ahead annual print magazine; the complete PS archive; and more. All for less than $9 a month.
LONDON – As governments across Western Europe began bailing out banks and their depositors, Eastern Europeans watched nervously, unsure about what the global financial storm would mean for them. Now that the storm has hit, the fragile bonds of European solidarity are being tested.
Two countries – Hungary and Ukraine – have already asked for large packages of support. Several more could do so over the next month if frozen credit markets do not thaw. If the situation continues until the end of the year, which cannot be ruled out, many more countries could experience serious banking crises.
Over the last two decades, Eastern Europe has undertaken wide-ranging reforms and embraced global financial integration. Foreign, mostly European, banks have entered these markets with unprecedented speed and force. These banks have increasingly reached out to more risky small- and medium-sized enterprises and helped people buy their own houses and start new businesses. But successful financial development is now coming back to haunt these countries.
To continue reading, register now.
As a registered user, you can enjoy more PS content every month – for free.
Register
orSubscribe now for unlimited access to everything PS has to offer.
Already have an account? Log in