263. Eastern Europe's Transformation and East-West Relations 10 Years After the Fall of Communism

Introduction
There has been an obvious uneven evolution of the East European countries in the last ten years. Theoretically, the process of transformation still points in the same direction: modern capitalism. Practically, however, many of the new democracies seem to have stopped along the road. A classification of political systems in Eastern Europe according to economic performance in the decade 1990-99 shows that there are competitive democracies and concentrated political regimes alongside war-torn societies and non-competitive political regimes. There are also differences among countries and regions. (World Bank Report on Eastern Europe, November 2001)

How can one explain the large divergence among performance levels in Eastern Europe after 1989? What constitutes the new East European ruling elite, what is the dominant political ideology, and how do the new capitalist institutions work? There are two prevailing viewpoints. The first one is known as the path-dependency approach; the second is the neo-classic sociology school of thought.

Post-socialist Continuity: From Plan to Clan
The path-dependency approach (D. Stark and L. Bruszt, 1998) claims that a society is transformed only by designing completely new democratic institutions - capitalism-by-design: destroy the old, state-socialist institutions and replace them with new institutions modeled on those in advanced democracies. The region's parliamentary systems, for instance - essential for democratic oversight - are examples of such transformations. Parliamentary systems in Hungary, Bulgaria and Romania were completely redesigned after 1990. For new countries, such as Slovenia, Slovakia, Croatia and the Baltic States, all state institutions are completely new, created almost from scratch. By comparison, for countries further east, such as Russia or Ukraine, most state institutions display a certain continuity in institutional systems, even after 1991.

According to Stark and Bruszt, discontinuity with the past is a prerequisite for a successful transition. For discontinuity to occur and new institutions to be formed, civil society must play a greater role during the transition process. Stark and Bruszt start from the assumption that both the state and the market in Eastern Europe are rather weak and improperly equipped for the task of social reform. There is the risk that new institutions could be captured by vested interest groups. In such a scenario, the transformation process would be distorted by the introduction of and abduction of power by Mafia-like institutions.

In countries marked by institutional continuity, the state bodies might even be "captured" by vested interest groups that manipulate them for their own profit. "State capture" represents the degree to which state institutions are used by private interest groups to intentionally distort the democratic and economic processes. To prevent state capture in countries with institutional continuity, the state must strengthen the role and functions of the "deliberative association" networks, which are specific to civil society (i.e., parliamentary support groups, business oriented, professional, non-governmental organizations, think-tanks, free press). Large, unlimited networks of "deliberative associations" could prevent the state from being used by private groups (clans); could render parliaments responsible to the public and governments accountable to the citizens; and could improve political participation, and strengthen civil-society and NGOs. If democratic institutions fail, then the transition is not from plan to market, but from plan to clan.

Discontinuity: Capitalism Without Capitalists and the Leading Role of the Intelligentsia
A second perspective on the East European transformation is a theory on new forms of capitalism. Eyal et al. (1998, 2001) argue that the democratic and market institutions in Eastern Europe are built in two rather different ways. The first one is capitalism without capitalists and is specific to Central European countries where the proper market institutions are being created by former socialist technocrats and dissident intellectuals before a well-formed class of capitalists takes shape. The leading role during this transition is played by the civilian intelligentsia and the main focus is building the institutions of democracy and market economy. Capitalists without capitalism, on the other hand, are emerging in the East European countries and Russia particularly. In this scenario, countries lack proper market and democratic institutions while new oligarchic capitalists interfere in politics. The leading role during this transition process is being played by the former Soviet-type bureaucracy.

As Eyal et al. suggest, these are two general forms of capitalism observed in Central and Eastern Europe. There is a lot of room for differences among countries. It does not mean, for example, that there are no clans (or cliques) in Central Europe, only that they are not dominating the transition process. Similarly, it does not mean that market institutions do not exist at all in Eastern Europe, only that they are not driven by vested interest groups.

For this paper, the similarity between the two viewpoints relates to the great role civil society (new parliaments, business and professional corporate networks, neighborhood and citizenship associations, civil rights activists, intellectual groups, think-tanks, free press, etc.) plays in reforming, redesigning and controlling state institutions. The difference consists in understanding who drives institutional reform and the transition process. Stark & Bruszt emphasize the role of non-governmental associations as watchdogs of governmental institutions, ensuring their functionality, while Eyal et al. stress the importance of the civil-society vision and leadership during the transition period. In the initial transition stage, the role of the civilian political leadership is essential: it is about vision, determination and democratic political action.

In Eastern Europe, the state is too weak while the market is not strong enough to regulate the functions of a nascent democracy. The countries with a strong network of deliberative associations and powerful intellectual leadership are more advanced in the democratic transition process and further along in their efforts at integration into the Western community. By contrast, in countries where civil society is weak and underrepresented, vested interest groups take over state institution. Western assistance, a key contributing factor to the region's democratization and reform, tends to increase and generates results in countries with established "civil society networks" and with improved government accountability.

The New East-West Relationship: From Confrontation to Cooperation and Assistance?
Due to poor economic conditions and weak performance during the democratic transition process in the post-Cold War era, the countries of Eastern Europe will likely request additional economic and democracy assistance from the international community in the first decade of the 21st century. Accordingly, new strategies of development have to be developed.

However, it should be stressed that the involvement of the recipient countries' domestic societies is essential for developing assistance programs in general and for developing East-West relationships in particular. As experience suggests, East-West relationships after 1989 are better for countries with a strong tradition of civil society, responsible parliaments and accountable governments. Western involvement in the region and the establishment of formal East-West relations made a real contribution to the development of market-oriented and democratic institutions. On the other hand, Western assistance helped some groups (or clans) to the detriment of others, impeding the democratic process. In countries where "clans" still fight the battle for capitalism, external assistance significantly buttressed the position of those that received aid, thereby weakening other actors in the process. Janine Wedel's example of Russia is a case in point. As she noted (1999): "The 'successful' aid projects relied on small cliques to circumvent, override, or otherwise reorganize political and economic institutions and authorities in the service not only of the donor's goals but also of those of the clique." (J. R. Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe, St. Martin's Press, 2001) In the absence of transparency and of active and expanded "deliberative association" networks, assistance support goes to already dominant cliques (clans).

The type of society evolving in Eastern Europe is significant for the continued existence of democracy and capitalism in the 21st century. It is also significant for the new East-West relationship and for world peace and stability in the next century. With the failure of the current transitions in Eastern Europe, in the 21st century, the international community might face smaller threats in comparison with the major wars of the 20th century, but no less dangerous.

Dr. Ionel Nicu Sava spoke at an EES noon discussion on May 23, 2002. The above is summary of his presentation, edited and revised by EES Program Associate, Sabina Auger. Meeting Report # 263.