Periodical 8/1990

THE

COMMUNITY A D ITS

EASTERN NEIGHBOURS

Blank page. not reproduced: 4

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EUROPEAN DOCUMENTATION

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A wind .of change is blowing through Central and Eastern Europe. Allian-ces and infrastructures which have been in place for the past 45 yearshave collapsed and are in the course of being replaced. Most CentralilndEast European countries wish to have close links with the EuropeanCommunity and eventually to join it.

This booklet expla ins what the European Community is doing to help itsEastern neighbou rs. Money has been made available to infuse new i nvest-

ment into the veins of industry and agriculture. New infrastructures arebeing set up to give them better access to the markets of the West and tostabilize and improve their food supply. Particular attention is being paidto the protection and improvement of their environment.

The booklet concludes with thumb-nail sketches of the European Commu-nity's ' future partners' and a description of its relations with the SovietUnion.

ISBN 92-826-1835-8

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OFFICE FOR OFFICIAL PUBLICATIONS

Of) * OF THE EUROPEAN COMMUNITIES

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* * * L-2985 Luxembourg11111111/111 II IIII! 111I1

9 789282 618356

THE EUROPEANCOMMUNITY AND ITSEASTERN NEIGHBOURS

Manuscript cornpleted in October 1990Cover: Prague, the Charles Bridge

(Photo: Benelux Press)

Cataloguing data can be found at the end of this publication.

Luxembourg: Office for Official Publications of the European Communities, 1990

ISBN 92"826-1835-

Catalogue number: CB-59-90-160-EN-

(S) ECSC-EEC-EAEC, Brussels. Luxembourg, 1990Reproduction is authorized, except for commercial purposes, provided the source is acknowledged.

Printed in the FR of Germany

CONTENTS

A HISTORIC CHALLENGE

. THE PEACEFUL REVOLUTION

. A COMMON HERITAGE

. EC RELATIONS WITH EASTERN EUROPE

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ITJ

THE ROLE MODEl OF THE EC

. LEGITIMATE ASPIRATIONS

. EFFECTIVE AND IMMEDIATE AID

. SPECIAL ASSOCIATION AGREEMENTSFree trade

Economic and technical cooperationFinancial assistancePolitical dialogue

. A STIMULUS TO SELF-HELP

. THE MULTILATERAL FRAMEWORKThePhare programmeThe European Bank for Reconstruction and Development

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PROFILE OF FUTURE PARTNERS

UNKNOWN NEIGHBOURSPolandHungaryCzechoslovakiaBulgariaRomaniaYugoslavia

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THE EC'S RElATIONS WITH THE SOVIET UNION

FURTHER READING

HISTORIC CHALLENGE

THE PEACEFULREVOLUTION

The peaceful revolution which swept EasternEurope in 1989 is probably the most signifi-cant event in global terms of the past 45

years. It is happening on the very doorstep ofthe European Community. It represents achallenge and an opportunity to which theEC has given an immediate response.

The Community and its Member Statesthanks to shared traditions and background,are uniquely placed to help their Easternneighbours on their way back to democracy.The Community, with more than 30 years ofexperience in bringing small and medium-sized nations together in an economic unitalso serves as a model for bringing market-driven economic policies to the eastern partof the continent.

Together, the revolution in Eastern Europeand the EC's programme to complete itssingle market by 1993 are changing thepolitical and economic architecture ofEurope. Germany isheing united. A new setof relationships has been created betweenthe Community and its European Free TradeAssociation (EFTA) partners as well as with itsneighbours in Central and Eastern Europe.

Throughout the period of the cold war, anddespite the limited ability of Eastern Europeto import western products, EC firms didmore than their American or Japanese com-petitorsin maintaining commercial flows

between East and West. Over the years, theCommunity has kept a discreet but open-door attitude towards its Eastern neighbourswho were part of Comecon, the Soviet-ledeconomic grouping.

From modest roots, these contacts grewrapidly between 1988 and 1990 with theconclusion by the Community of trade andcooperation agreements with East Germany,Hungary, Czechoslovakia, Poland, Bulgaria,the Soviet Union and Romania. At the sametime, the Community, and more especially

the European Commission , has been at thecentre of combined western efforts to sup-port the economic liberalization process inEastern Europe through the Phare pro-gramme.

The Phare programme was set up by theseven-nation Western Economic Summit (theso-called G-7) in July 1989. The initial aimwas to coordinate Western aid to Hungaryand Poland , the first East European countriesto strike out on the reform road. In 1990 itsscope was extended to cover the other coun-tries of Central and Eastern Europe.

But these developments are only a beginn-ing. The time when Europe was divided intothree distinct regional economic groups the Community, EFTA and Comecon - now changing. The map is being. redrawnwith the Community firmly atthe heart of thenew Europe. This Europe is set to emerge asa new force .in the balance of world powera fact already recognized by the UnitedStates of America, Japan and the SovietUnion.

A COMMON HERITAGE

The emerging democracies in the East are

part of the new Europe just as they were partof mainstream Europe until their formerCommunist rulers shut them off from theirWestern neighbours at the end of World WarII. Traditional contacts were lost, turningEastern Europe into unknown territory fortwo generations of EC citizens.

Until then, culture and commerce inter-mingled freely. Mitteleuropa, which coveredparts of what were to become both East andWest, was not just a geographic notion. It vir-tually came to mean a way of life.

Czechoslovakia was among the most highlyindustrialized countries of the whole Europe in the 1930s with a standard of livingthat was comparable to that of Switzerland.

The Eastern Europeans have played their partin the great cultural , scientific, political andeconomic rnovements that have shaped thehistory of Europe.The Renaissance and the Reformation tou-ched the whole continent. Copernicus is oneof Europe s greatest scientists. East Euro-peans played a crucial role in the defence ofEurope against outside invaders. They werepart of the power struggles and patterns ofalliances that marked much of Europe

history. Eastern Europe houses part of thecontinent' artistic and architecturalheritage.The desire of its peoples to return to the fun-damental principles of freedom anddemocracy has always been present, risingirrepressibly to the surface at regular inter-vals, starting with the East Berlin uprising in

A COMMON RESPONSIBILITY

Each day in Central and Eastern Europechange is asserting itself more strongly.Everywhere a powerful aspiration towardfreedom , democracy, respect of humanrights prosperity, social justice and

peace is being expressed. . . The Corn-munity and its Member States are fullyconscious of the common responsibilitywhich devolves on them in this decisivephase in the history of Europe. They areprepared to develop with the USSR andthe other countries of Central and Eastern

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blerns. Yugoslavia, with its own brand ofcommunism , was never a part of Comecon.But it is going through the sarne revolu-tionary process as the others.All the countries of Central and EasternEurope share commOn characteristics. Theireconomies were in a state of near collapse;there had been virtually no investment inplant and equipment in recent years; in-frastructure was suffering from similar

1953, followed by dramatic (and sometimesviolent) events in Poland, Hungary and

Czechoslovakia over the following 30 yearsand culminating in the almost bloodlessrevolutions in one East European countryafter another in 1989.The movement, begun in Poland andHungary, accelerated during the year to

reach Czechoslovakia East Germany,

Bulgaria and finally Romania by year s end.Each of the six countries has taken its ownroute towards pluralistic democracy and amarket-driven economy.East Germany is now part of the FederalRepubl ic. The first free elections were held inthe other countries during the first half of1990. Each of the East European countries isgrappling with its own set of economicsocial , political and sometimes ethnic pro-

Europe, and with Yugoslavia in so far asthey are committed to this path , closerand more substantive relations basedupon an intensification of politicaldialogue and increased cooperation inall areas:

Extract from the Declaration on Centraland Eastern Europe by the EuropeanCouncil (of the Community s Heads of

State or Government)Strasbourg, and December 1989.

neglect. Environmental pollution was out ofcontrol.

The model to which the peoples of EasternEurope aspired in terms of freedom and liv-ing standards was that of the European Com-munity. They saw how 12 countries ofWestern Europe had decided to form a fullyintegrated market complemented bymonetary and , eventually, political union.

Moreover, the single market project, by put-ting Eastern Europe before the prospect ofhaving to face a powerful and compacteconomic bloc, probably helped makeseveral communist regimes aware of thenear-bankrupt state of their economies. Justas the EFTA countries were concerned at los-ing market share and competitiveness once

A COMMON HERITACE AND CULTURE

The European Council expressed itsdeep satisfaction at developments inCen-tral and Eastern Europe. It applauds thecontinuing process of change in thesecountries with whose peoples we share acommon heritage and culture. This pro-cess of change brings everdoser a Europewhich , having overcome the unnaturaldivisions imposed on it by ideology andconfrontation , stands united in its com"

EC RELATIONS WITHEASTERN EUROPE

Contacts between the Community andEastern Europe began in the early 1970s butat Russian insistence, these were initiallychannelled through Comecon. The Com-muntiy made a first offer in 1974 to concludea series of trade agreements with individualComecon countries and repeatedly restatedthis willingness.

Only Romania responded and an agreementwas signed in 1980, although limited accordson steel and textiles were signed with anumber of others.The main obstacle to normal trade relationsbetween the Community and Eastern Europewas Comecon s insistence that it deal withthe Community on behalf of its members.The Community was prepared to establish a

the EC internal market is achieved , many EastEuropean countries even before 1989 hadbegun looking at ways to break out of the fur-ther economic isolation they risked once theinternal market becomes a reality.

The genesis of today s level of cooperationgoes back a long way.

mitment to democracy, pluralism, the

rule of law, full respect for human rights,and the principles of the marketeconomy:

Extract from the conclusions of thePresidency, meeting of the European

CouncilDublin 28 April 1990.

limited working relationship with Comeconbut insisted that in parallel there should betrade agreements with any of its memberswho wanted one.The Community resisted the Comecon ap-proach for several reasons. Comecon wasclearly seeking to reinforce its internationallegitimacy through creating formal links withthe ECBut more importantly, the Community con-sidered that Comecon did not have the struc-ture or authority to be an equal partner. Theorganization was dominated by the SovietUnion. The degree of economic integrationand shared decision-taking was more limitedthan that in the Community. Comecon hadno authority to negotiate on trade and otherissues on behalf of its members.Exploratory meetings did take place bet-ween the European Commission and the (23

Comecon secretariat from 1978 onwards, butlittle progress was made. If formal contactswere restricted during this period, trade rela-tions were also limited. By 1986, exportsfrom the EC to Comecon still accounted fora mere 7% of the EC's external trade, the bulkof it with the Soviet Union.

It was in 1986 after Mikhail Gorbachev cameto power that Comecon signalled itsreadiness to accept the Community' s doubleapproach, agreeing to the principle of aframework agreement with the Communitybut leaving trade matters to be negotiated byits individual members. Thereafter the paceaccelerated.The agreement between the Commun ity andComecon , signed in Luxembourg on 25 June1988, took the form of a Joint Declarationunder which formal relations between thetwo were established. The two sides under-took to cooperate in areas where they werecompetent and where there is a common in-terest.

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The declaration opened the way for thenegotiation of the individual trade

agreements. These have been concludedwith the Soviet Union and with all the EastEuropean countries.

The first to sign an agreement was Hungaryin September 1988 to be followed by

Czechoslovakia (December 1988), Poland(September 1989) the Soviet Union(December 1989) and East Germany andBulgaria (both May 1990). The initial , limitedagreement with Czechoslovakia was up-dated in May 1990.

Butthe rapid pace of events in Eastern Europehas al.so forced the EC to develop additionalnew responses. These so-called first-genera-tion trade agreements are modest in-struments with which to meet the challengeof helping the emergence of democracy anda market economy in Poland and Hungaryand the rest of Eastern Europe.

RECENT DEVELOPMENTS IN EC-EAST EUROPEANRELATIONS

Here is a brief summary of the most significant recent developments in rela-tions between the Community and Eastern Europe:

1. June 1988: a delegation of Comecon countries signs a Joi'nt Declaration inLuxembourg with the EC agreeing on mutual recognition of the twoorganizations.2. September 1988: a cooperation agreement is signed between the EC andHungary.

3. December 1988: a trade agreement is signed with Czechoslovakia.

4. July 1989: the G-7 summit in Paris gives the EC the task of coordinatingWestern aid to Poland and Hungary. The so-called Group of 24 is created.5. September 1989: the EC signs a trade and cooperation agreement withPoland.

6. November 1989: the EC Heads of Government hold a special Summit inParis to discuss aid to Eastern Europe. On the eve of this summit, EC ForeignMinisters agree a common strategy for easing Comecon restrictions on high-technology exports to Eastern Europe.

7. December 1989: the EC Summit in Strasbourg agrees the creation of a Euro-pean Bank for Reconstruction and Development for loans to Eastern Europe.

8. December 1989: the Group of 24 meet in Brussels to define their aid pro-gramme for Poland and Hungary and to express willingness to help other EastEuropeans 'once the necessary pol itical and economic reforms ' havebeen putin place.

9. December 1989: the EC and the Soviet Union sign a trade and economiccooperation agreement.

10. April 1990: a special EC Sum mit agrees arrangements for incorporating theGerman Democratic Republic into the Community. Community leaders alsodecide to offer a new type of association agreement to individual East Euro-pean countries.

11. May 1990: the German Democratic Republic and Bulgaria sign tradeagreements with the Community. The 1988 agreement with Czechoslovakiawhich was limited in scope, is updated.

12. May 1990: the Group of 24 agree to extend the Phare programme to otherCentral and East European countries.

13. July 1990: the German Democratic Republic enters a monetary and socialunion with the Federal Republic.

14. October 1990: The two parts of Germany are united within the FederalRepublic.

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THE ROLE MODEL OF THE

LEGITIMATE ASPIRATIONS

Immediately after its victory at the polls inApril 1990, Hungary s Democratic Forum

which headed the winning c:oalition, said

that membership of the European Commun-ity would be the new government's principalforeign policy priority. Leaders of other Cen"tral and East European countries have madesimilar statements.The European Community is a magnet forEast European reformers. This is principallybecause of the Community's record of

democracy and balanced economic: growth.Their aspirations to belong to such an orderare legitimate. But there is also a necessaryelement of self-interest. East European coun"tries are .concerned lest the c:reation of thepost-1992 single market will make it more

diffic:ult for them to export to the Com-munity.

The Community is aware of the aspirationsand concerns of its Eastern neighbours. Butearly membership of the Community is ex"eluded fora number of reasons, both

political and economic:. For one thing, thecountries of Eastern Europe need to con-solidate their commitment to pluralistdemoc:racy and to a market-driven economicsystem.

In strictly technical terms, the economies ofthe countries of Central and Eastern Europeare in no condition to withstand the shock offree market competition. Despite their keen-ness to join the EC, even Czechoslovak

leaders whose country is the mostdeveloped of the region - know they willhave to wait.

QQJ Prague: Czech youth in historical setting (photo: Marc Riboud, Magnum)

Several years of deep-going reform and

restructuring are clearly required first.

Another major reason for putting offmembership is the Community's own deci-sion not to consider a further enlargementuntil the single market process is completed.This means that even current applicationsalready submitted by Austria, Turkey, Cyprusand Malta will not be considered until after1992.

EFFECTIVE AND IMMEDIATEAID

In the light of these constraints, the Com-munity has focused on short- and medium-term support for the reform processes whichare under way. It has taken steps to open itsmarkets to East European exports, and hasput in place a range of actions and program-mes both on its own initiative and incooperation with other Western countries.Many of these are already operational.

The Phare programme, which the Commis-sion is coordinating on behalf of the 24donor countries, is the most wide-ranging.The Community' project to conclude

special association agreements with in-dividual Central and East European coun-tries is the most ambitious.

In each case, the Community has made thecontinuation or extension of its aid condi-tional on the consolidation of democracyand progress towards a market economy bythe recipient country.

The States of Central and Eastern Europehave met the challenge. Democratic multi-party elections have been held in all of themexcept Yugoslavia (at least at federal level).The results of the votes have varied fromcountry to country. All have begun im"

plementing programmes to liberalize and

privatize their economies, although none ofthe others has gone as far as the radicalreforms being implemented in Poland.The Community has taken immediate actionto support efforts to develop market-orientedpolicies, to grant these countries better ac-cess to Western markets, to provide financialaid , to offertechnical assistance and training,to facilitate foreign investment, and to helpclean up the environment.

The reorientation of trade towards hard-cur-rency markets is a top priority for each ofthem , hitherto restricted by their Comeconcommitments to doing a large part of theirtrade with each other. Central and Eastern

Europe (including the Soviet Union) accOUntfor only 6% of the Community's externaltrade. The comparable figure for the muchsmalierEFTA countries is 25%.

East European countries are already takingsteps to reduce their soft-currency trade withComecon. During 1990, the Communityreplaced Comecon as Hungary s principal

trading partner, while Comecon s share in

Czechoslovakia s trade dropped from 60 to50% in the course of the year. To help its ac-cess to EC markets, Czechoslovakia an-

nounced that it would be manufacturing toWest European norms and standards by theend of 1992.

There has also been a structural imbalance intheir trade with the Community. Their big-gest export items have been raw materialsfuels and basic products like steel andplastics. The main products imported fromthe Community have been products of con-siderably more added value: engineeringproducts and transport equipment followedby other manufactured goods and chemicals.

Details of Community trade with individualEast European countries are given on the

table below. The Community has a tradesurplus with Hungary and Bulgaria and adeficit with the others.

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SPECIAL ASSOCIATIONAGREEMENTS

Although the first generation trade andcooperation agreements lift quotas and otherquantitative restrictions on exports from theEC's East European partners, they do not con-tain any element of tariff preference tofacilitate their access to the Communitymarket. Nor do they provide for statutoryfinancial aid.

Butthey can bebuilton. They are the startingpoint for the second-generation of associa-tion agreements or ' European agreements ' ofa totally new kind. These agreements wouldeven go beyond the free-trade accords whichthe Community has forged with the in-dividual countries of EFTA.

Although the Community has a first"genera-tion agreement with theSoviet Union, itdoesnot intend to include the USSR in the net-work of association agreements. The size ofthe Soviet economy and its particular pro-blems require a different cooperationframework.

The association agreements are to consist offour essential elements:

(i) free trade between the country concernedand the European Community;(ii) industrial technical and scientificcooperation;(iii) a pluriannual programme of financialassistance;(iv) the.creation of a mechanism for politicaldialogue.

The agreements would constitute an end inthemselves. They are not a transitional phaseon the road to membership of the Commun-ity; neither do they exclude the possibility ofan 'associated' country applying subse-quently to join the EC

Their implementation would be conditionalon internal progress by the partner countryconcerned in the area of the rule oflaw, therespect for human rights, the maintenance ofa pluralist democracy and the degree ofeconomic liberalization.

Free trade

The aim of the agreements is to bring aboutthe phased introduction of two-way freetrade. The step-by-step approach will take ac-count of the specific reforms under way

each country as they concern prices, sub-sidies, taxation, monetary policy, currencyconvertibility and its system of foreign trade.The aim of the reforms is to align theirnational systems with the open system ofmultilateral trade.and global competition.

In moving towards the free-trade objective,the Community will reduce its tariff andother import barriers more rapidly than part-ner countries. Associated countries wouldopen their markets for Community goods ac-cording to a flexible timetable and onewhich reflects their specific situation.Once the economies of the associated coun-tries have succeeded in bringing themselvesclose to the level of the Community, negotia-tions can begin on the free movement of per-sons, services and capital. Their economiclegislation could also be harmonized withthat of the Community.

Economic .and technical cooperationThis cooperation will reinforce the structuralchanges undertaken by the associated coun-tries, contributing to their integration into theworld trading system. Prime focus will be onmeasures to facilitate technology transferand direct foreign investment.Actual cooperation projects will cover areassuch as professional training, the environ"ment, the modernization of agriculture andof agri-industries, the renovation of industrialstructures, science and research, energy,mining, transport, tourism and other ser-vices, telecommunications health and

medical equipment, standards and norms.

Financial assistanceThe Community will offer a set amount ofcredits for each associated country to financecooperation and technical assistance. TheCommunity is already committed to spen-ding ECU 2 billion in assistance to Central

and East European countries in the 1990-period.The financing of projects which promote in-vestments in the private sector will benefitfrom a particular priority. Financialassistance may take the form of subsidies(technical assistance, interest-rate rebates) orloans (European Investment Bank, the Euro-pean Coal and Steel Community, Euratom)or risk capital and other instruments.Community Member States should also in-crease their cooperation with associated

countries in the area of export credits or ex-port insurance guarantees.

Political dialogueThe association agreements will provide theinstitutional framework for a politicaldialogue between the Community and eachof its partners. It will enable views to be ex-changed on urgent bilateral and multilateralissues and thereby greatly facilitate informa-tion flows. These exchanges will become in-creasingly important when new forms ofin-

Election of Miss Hungary: sex-appeal recognizes no frontiers (Photo: Leonard Freed, Magnum)

03)

tegration and cooperation in Europe (5uch asthe strengthening of the CSCE framework) are put in place.

A Council of Association will be created foreach agreement in which the Communityand individual partners will discuss anddecide on issues of mutual interest. A struc-ture will be created for cooperation betweenthe European Parliament and the nationalparliament of each associated country.

A STIMULUS TO SELF-HELP

These association agreements will form thenucleus of the Community' s efforts in favour

The Conference on Security and Cooperationin Europe which brings together the countriesof Western and Eastern Europe (including theSoviet Union) plus the United States ofAmerica and Canada.

of the countries of Central and EasternEurope. But they fit into a broaderperspective.Farone thing, as Commission Vice-PresidentFrans Andriessen has said:The European Community is willing to ac-

cept its co-responsibility for what is going onin these countries. But it should also be madedear that our assistance cannot fully replacethe responsibilities to be assumed by the in-dividual countries themselves. To put itanother way: we can do no more than helpthem to help themselves:In addition , the touchstone for the negotia-tion and implementation of such agreementswill be the degree of progress on politicaland economic liberalization achieved by theindividual countries. Such considerationshave already applied in the decisions .theCommunity has taken to accelerate theelimination of import quotas on Polish andHungarian goods in the first-generationagreements with these countries and to up-date the very limited 1988 agreement withCzechoslovakia.To quote Mr Andriessen again:In the view of the European Cornmunity,

there should be irreversible trends for realdemocracy and an opening to a marketeconomy in the particular country con-cerned before an association agreement canbe put into place:

THE MULTILATERALFRAMEWORK

The Community has taken a key role in coor-dinating the overall Western aid efforts forCentral and Eastern Europe. These efforts arecentred on the Phare programme and thecreation of a European Bank for Reconstruc-tion and Development (EBRD). The initialsuccess of the Phare initiative in support ofreform and restructuring in Poland andHungary has led to its extension to the rest ofCentral and Eastern Europe.

Bucharest: the novelty of parking meters (Photo:Martine Franck, Magnum)

The Phare programmeThe Phare programme was set up by theGroup of Seven (G-7) summit in Paris in July1989. The summit charged the European

Commission with coordinating assistancefrom the Group of 24 Western industrializedcountries taking part in the programme.This function enabled the Commission totake on a new and important internationalpolitical role. For, besides coordinatingWestern aid , it has increasingly taken thelead in framing Phare policy and strategy.The initial aims of Phare were to sustain thepolitical and economic reform process inPoland and Hungary and in particular tostrengthen the private sector.

The priority areas identified by the Commis-sion , in consultation with the IMF, the WorldBank and the OECD, are now the object ofsubstantial programmes. These areas areagriculture and rural development, enter-prise restructuring, banking and finance, in-

Europe at the crossroads: the EC in changingpolitical and economic environment; speechdelivered in Brussels June 1990.

The G-24 consists of the 12 EC countries plusAustralia, Austria, Canada, Finland, Iceland,

Japan, New Zealand, Norway, SwedenSwitzerland, Turkey and the United States ofAmerica.

vestrnent, the environment and professionaltraining and technical assistance.In addition, the G-24 countries have takenaction to facilitate access to Western marketsfor Polish and Hungarian exports. They haveremoved quantitative restrictions on Polishand Hungarian products, extended rnost-favoured nation status (where this was notalready granted) and extended to them theirsystem of generalized preferences (SGP).

The Community and its G-24 partners havealso provided financial safety nets for Polandand Hungary in the form of the Polish

In May 1990 the Commission an-nounced a set of projects for Polandand Hungary worth ECU 86.5 millionas part of its contribution to Phare pro-jects. More than half the amount willgo on environmental protection, a

sector where the Community hastaken the lead in supporting major

control efforts.

The list of projects includes:1. Poland: Environmental protectionprogramme2. Hungary: Environmental protec"tion programme3. Poland/Hungary: Participation inBudapest Regional EnvironmentCentre4. Poland: Basic technical assistancefor privatization programme5. Hungary: Support for modernizingthe financial system6. Poland/Hungary: Cooperation inthe field of economics7. Poland: Sectoral import programmefor animal feed and feed-additives8. Poland/Hungary: Technical assis-tance for implementing the Trans-European mobility programme foruniversity studies (Tempus)

Stabilization Fund and the Community'medium-term loan of USD 1 billion toHungary. The stabilization fund has helpedunderpin Poland' radical reform pro-

gramme which might have otherwise provedtoo risky. This programme has reduced infla-tion , sttengthened the zloty and improvedthe balance of payrnents.

The medium-term loan has helped maintainHungary s access to international capital

markets and encouraged other institutions toprovide finance for economic restructuring.

The Community has invited the other G-members to participate in the Tempus pro-gramme for student exchanges and in theEuropean Foundation for Training. Tempuswas formally established by the Communityin May 1990.

With funding ofECU 117 million , Tempus isa three~year programme whose main pur-pose is to finance academic exchanges toenable students and teachers from Eastern

Europe to spend up to a year at an EC univer-sity or in a company or administration. Asmaller number of teachers and studentsfrom EC universities would spend equivalenttime in Eastern Europe. Tempus also pro-motes exchanges between Eastern univer-sities and universities or private businesses inthe EC

In May 1990, the Commission produced anaction plan to extend the operations of the

Phare programme to cover BulgariaCzechoslovakia, the German DemocraticRepublic (to the extent necessary prior toGerman unification), Romania andYugoslavia. This proposal was subsequentlyadopted by the rest of the G-24. Romaniaparticipation was temporarily withheldbecause of internal events there.

Priorities identified by fact-finding missionssent to these countries by the Commissionwere similarto those in Hungary and Poland:

(i) improved access to Western markets;(ij) stabilizing and improving food supply;(iii) professional training;(iv) environmental protection;(v) investment and economic restructuring.

Specific emphasis varies from country tocountry. The Commission s initial assess-

ment of national priorities for each countryare as follows:

Bulgariaagriculture and the agri-foodstuffs industry,the environment,investment (transport and telecom-munications),training (management, financial servicesscientific and technical),restructuring (chemical and light industries),tourismimproved access to markets.

Czechoslovakiaindustrial restructuring,

the environment (pollution control, in-

dustrial waste, nuclear safety),energy,training and youth exchange,investment (transport and telecom.munications),scientific and technical cooperationimproved access to markets.

German Democratic Republicfood supplies (restructuring of slaughter-houses, dairy sector and sugar production),the environment (water, air and industrialpollution protection of the culturalheritage),investment (transport and telecom-munications),training (management, higher educationscientific and technical),improved access to markets.

Romaniaagriculture and food supply (research , pro-duction technology, joint ventures),the environmentinvestment (transport, tourism , smaller enter-prises),training (management, banking, tourism

communications, agri-foodstuffs industry),improved access to markets.

Yugoslaviaagriculturethe environment (notably pollution of theDanube and Sava basins and of the Adriaticcoast),investment,restructuring of the banking sector and theindustrial sectortraining (banking, management, taxationsystems) ,

structural adjustment, including the socialaspectsimproved access to markets.

The Commission also suggests that a moreformal mechanism for a financial safety netbe put in place for the five countries.Memoranda submitted by them to the G-strongly suggest that requests for facilitieslike the Polish Stabilization Fund or themedium-term loan for Hungary will be forth-coming.

Czechoslovakia has said it is seeking a largestand-by facility while Bulgaria andYugoslavia are seeking other forms of finan-cial support. The Commission believes thetime is ready for the G-24 to consider a

general facility to which its members wouldcontribute. Individual reforming countries inCentral and Eastern Europe could draw onthe facility as and when necessary. The G-would tailor the credits or loans to the needsand absorptive capacity of the beneficiary.

To ensure the soundness of restructuringmeasures financed through the facility, would be essential for the country concern"ed to belong to the IMF and to accept Com-mitments as to the macroeconomic strategyit should follow. As can be seen from thefollowing table, the countries of Central andEastern Europe are members, or have appliedfor membership, of the InternationalMonetary Fund (lMF), the International Bankfor Reconstruction and Development(lBRD), i.e. the World Bank and the GeneralAgreement on Tariffs and Trade (GAIT).

EASTERN EUROPE' S MEMBERSHIPOF INTERNATIONAL FINANCIAL ORGANIZATIONS

IMF IBRD GATT

Poland Member Member Member

Hungary Member Member Member

Czechoslovakia Applied Applied Member

Bulgaria Applied Applied Applied

Romania, Member Member Member

Yugoslavia Member Member Member

The European Bank for Reconstructionand Development

The proposed facility would be additional tothe specific project-related activities of theEuropean Bank for Reconstruction and

Development (EBRD). The creation of theEBRD is the Community s main multilateralinitiative for Central and Eastern Europe. Itwas first proposed by President Franc;:ois Mit-

terrand in a speech to the European Parlia-ment in September 1989 and endorsed at theEC's Strasbourg Summit in December of thatyear.

It has been extended to the G-24 Phare net-work and beyond to include the Central andEast European countries and the SovietUnion as well as other members of the IME

The Community and its Member States havea majority stake in the EBRD which has a

share capital of ECU 10 billion. In all , thereare 42 members - 40 countries plus theCommunity and the European InvestmentBank. Thebank will play an important role insupporting productive investment in the

private sector and in related infrastructure.

According to the first article of the EBRD'statutes

the purpose of the Bank shall be to foster thetransition towards open market-orientedeconomies and to promote private and en-trepreneurial initiative in the Central andEast European countries committed to andapplying the principles of multipartydemocracy, pluralism and market eco-

nomics.'

The seat ofthe bank is London. Its Presidentis Jacques Attali , former adviser to PresidentFranc;:ois Mitterrand.

COMMUNITY ATTITUDES TO CENTRAL AND EASTERN EUROPE

In a survey conducted in the 12 MemberStates in the spring of 1990, 70% of thoseinterviewed felt that the European Com-munity should speed up the pace of

Eurobarometer No June 1990

economic, political and monetary in-tegration to enable it to participate moreeffectively in the construction of a widerdemocratic Europe.

PROfilE Of fUTURE PARTNERS

UNKNOWN NEIGHBOURS

Following the bold decisions of theauthorities in Poland and Hungary to adoptfar-reaching reform programmes... the entireinternational community has welcomed theextension of reform to other countries inCentral and Eastern Europe. It is now up tothe industrialized countries to rise to the

challenge posed by the courage and deter-mination of the peoples most directly con-cerned:Despite geographic proximity, the EC's

Eastern neighbours were relatively unknownbefore the revolutions of 1989. They wereperceived by public opinion in the EC as

monolithic satellites of Russia with littleseparate identity of their own.Their rigid communist political structuresand uniformly lower standards ofliving didlittle to stimulate Western interest in them.Their lack of hard currency made them poormarkets for EC exports, while their ownshoddy goods - with the slight exception ofbottom-of-the-range cars like Skodas, Wart-burgs and Polski Fiats - made little inroadson Community markets.The table on the following page sets outsome basic indicators for the Comeconcountries of Eastern Europe.

The table shows that on a broad range ofeconomic and social indicators, the coun-tries of Eastern Europe lag behind theirWestern neighbours. Others could be addedto confirm the gap.

Life expectancy in Central and EasternEurope varies between 70 years (Romaniaand Hungary) and 72 years (Bulgaria). In theCommunity it ranges from a low of 73 yearsin Portugal to 77 in France, Italy, Spain andthe Netherlands.

Romania, the poorest country of EasternEurope, has a per capita GDP which isscarcely one third of the DECO average. Thefigures in the table should be consideredwith some caution; they are regarded bysome Western economists as on the highside. Other estimates would actually mark

This quotation is from the conclusions of theEuropean Commission s action plan of May7990 for extending G-24 assistance to BulgariaCzechoslovakia, the German DemocraticRepublic, Romania and Yugoslavia, SEC(90)843 final.

Foreign debt

Total (billion USD) Per capita (USD)

Poland 40.4 1 078

Hungary 19. 1 873

Czechoslovakia 431

Bulgaria 1 056

Romania 1.0

Yugoslavia 17. 733

Sources: World Bank, IMF.

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down the dollar equivalent of the GDPfigures for most of these countries.

But a closer examination of the figures showthat far from being two-dimensional copiesof each other, there are considerable dif-ferences in the situation of the individual

countries. This is also evident from the tableon their debt position (see page 19).

It is worth , therefore, looking more closely ateach in turn to give a brief political profileand assess their capacity to integrate more orless rapidly into the international marketeconomy system.

Wadowice, Poland: Pope john Paul /I visits his home town (Photo: Bruno Barber, Magnum)

PolandPoland was the first of the Central andEastern European countries to embark on its1989 revolution. The events of 1989 werethe follow-on to the concessions won by theSolidarity trade union in 1980. But theliberalization movement was abruptlychecked by the imposition of martial law bythe Communist government in December ofthat year.However, the manifest incapacity of thegovernment to cope with the economic andsocial situation led it to turn to Solidarity in

late 1988 to help solve the crisis. An agree-ment was reached the following April legalize Solidarity once more and to holdmultiparty elections. The diary of events in1989 is given below.But paradoxically, Poland's election waS lessfree than those subsequently held in otherEast European countries. Elections were forthe 460-seat lower house and the 100-seat

senate or upper house.In the free elections for the senate, Solidaritywon 99 seats. In the lower house, Solidaritywas allowed to contest only 35% of the seats I?J)

POLAND ~ EVENTS IN 1989

February 6: Round table discussions in-volving the government, Solidarity andthe Catholic Church

April 7: Agreement on legalization ofSolidarity and elections.

May 17: Catholic Church recognized.

June 4: Solidarity wins overwhelmingvictory in parliamentary elections (all161 allotted seats in lower house and 99out of 100 in Senate).

July 19: General Wojciech Jaruzelskielected president.

all ofwhich it won. The target date fora newconstitution is May 1991. New, fully free

elections would then follow.Poland is a member of the IMF, the WorldBank and GATT. It has applied to join theCouncil of Europe.

July 25: Solidarity invited into coalition

government.August 7: Lech Walesa suggests Solidari-

ty allies itself with two minor parties toform government.

August 24: Tadeusz Mazowieckibecomes first non-communist PrimeMinister in 40 years.September ..12: 24-member coalitiongovernment confirmed. Only four seatsgo to the Communitsts.

It has one of the highest levels of foreign debtof Central and Eastern Europe. This debt isthe biggest in absolute terms at USD 40.4billion , while on a per capita basis itarnountsto USD 1 078 ~ a figure surpassed only byHungary.

Gdansk, Poland: hotel waitresses taking break from work (Photo: Bruno Barber, MagnLim)

Poland is the country of Central and EasternEurope which is most dependent on Westernfinancial support. It waS first in line to obtainit: through the Phare programme and thebilateral assistance from the Community, theEC Member States, the other G-24 par-ticipants and the international financial in"stitutions.At the beginning of 1990, the zloty was

made partly convertible as part of the in-troduction of a new economic reform pro-gramme. To support this, the PolishStabilization Fund of USD 1 billion was setup by Western governments to bolsterforeign exchange reserves.As a result of these combined efforts by thePolish authorities and the international com-munity, food supplies have improved, theexternal account is in surplus and inflationhas fallen significantly.In addition to its first-generation trade agree-ment with the Community, Poland likeHungary and Czechoslovakia - has signeda cooperation agreement with EFT A. Besides

investigating the possibilities of free tradethe agreements cover trade promotion as

well as economic, scientific, industrial andtechnical cooperation.HungaryHungary has been the most persistenteconomic reformer of Eastern Europe. TheCommunist government which took overafter the brutal repression of the 1956 upris-ing made a conscious choice to give priorityto improving living standards.Its first major effort to open its economydates from 1968. But this and subsequent ef~forts have been frustrated partly because thereform measures were inadequate and partlybecause of external payments constraints.

Hungary has the highest per capita level ofdebt in Eastern Europe. At USD 1 873 forevery man , woman and child it is nearly dou-ble that of second-placed Poland.But the result of earlier liberalization effortsmeant that the post-1989 economic reformprocess has been less turbulent in Hungarythan elsewhere in Eastern Europe. Foreigninvestors already have a certain access

to the Hungarian market. General Electric ofthe United States bought a controlling in-terest in the Tungsram lightbulb company.Another American group, General Motorshas signed a deal with the Raba truck group.Budapest has a fledgling stock exchange.At the political level , the Hungarian Com-munist party took the lead in the reform pro"cess, effectively programming its owndemise. It abandoned its so-called leadingrole in 1989 and began Round table discus-sions with opposition groups in Septemberthat year.

Budapest, the Cathedral (Photo: Leonard Freed,Magnum)

These prepared a transition to elections inMarchi April 1990 for a single-chamber386-seat parliament. The outcome of thevote is given below. It led to the creation ofa coalition government led by DemocraticForum with the support of the SmallholdersParty and the Christian Democrats.

ELECTIONS IN HUNGARY,MARCH/APRIL 7990

% of Seatsvote

Democratic Forum

(centre-right)

Free Democrats(centre-liberal)

IndependentSmallholders(farmers)

Socialists (reformedCommunists)

Young Democrats(centre-liberal)

Christian DemocratsHungarian SocialistsWorkers

(unreformedCommunists)

Social Democrats

Other

165

Nadudva~ Hungary: trying out computertechniques at cooperative farm (Photo: LeonardFreed, Magnum)

To help Hungary continue to implementthereform programme in the face ofa worseningof its payments position in 1989, the Com-munity agreed to put together a five-yearloan of ECU 870 million (USD 1 billion). Thepayment of the first tranche of this loan wasconditional on agreement between Hungaryand the IMF on the precise terms of an IMFstand-by credit. These were agreed in March1990 and the Community subsequentlydisbursed the first tranche of ECU 350million.Hungary is a long-standing member of theIMF, World Bank and GA n. In addition toits first-generation trade agreement with theCommunity, Hungary signed a cooperationagreement with EFT A in June 1990. Of thecountries of Central and Eastern EuropeHungary is the one which has most clearlyexpressed its intention to apply tojoin theECas soon as possible.

CzechoslovakiaCzechoslovakia is the industrially most-ad-vanced of the Community Easternneighbours. It is also the one which had - inpre-Communist days the strongestdemocratic tradition. In the 1930s, the stan"dard of living ofits citizens was On a par withthat of Switzerland.Czechoslovakia has a relatively low level offoreign debt (USD 6.9 billion). This willallow it access to international capitalmarkets at relatively keen rates of interest. Ithas applied for membership of the IMF andthe World Bank, although credits from thissource will take some time to organize.Even more so than in Hungary, theCzechoslovak Communist party opted out ofthe reform process. After a series of populardemonstrations in November 1989 the partyeffectively handed over power to CivicForum , although keeping some governmentportfolios until the elections of June 1990.Vaclav Havel , the most prominent figure inCivic Forum and a member of Charter 77, thedissident group set up afterthe brutal repres-sion of the 1968 Prague Spring by WarsawPact troops, was elected President.

Prague: Vive la liberte! (Photo: Ian Berry, Magnum)

Civic Forum , with its Slovak sister group,won a comfortable majority in the 1990 elec-tions (see below).The elections were for a 150"seat lower

house (101 from the Czech republic and 49from Slovakia) and a 150-seat upper house orHouse of the Nations (75 members fromeach). The two houses must together write anew constitution by 1992.Because of the harmonious way it has car"ried through democratic: reforms, while

maintaining a high degree of political con-sensus, and because of its industrial tradi-tions, Czechoslovakia is considered to beone of the countries of Central and Eastern

Europe which is best placed to make the leapto a market economy.It has a favourable geographic position, a

highly educated workforce and an infrastruc-ture which, although neglected, is lessdevastated than in other countries of theregion. It has viable firms in the automobileengineering, glass and footwear sectors.

ELECTIONS INCZECHOSLOVAKIA, 1990

% of Seatsvote

Civic Forum/Publicagainst violence(Czech/Slovak anti"Communist alliance)

Communists

Christian Democrats

Moravian andSilesian Autonomists

Slovak National Party

Coalition of otherminorities

In terms of economic reforms the newCzechoslovak government has shown bold

intentions but remains cautious in practice.The reform programme provides for privateenterprise and private property, the openingof the country to foreign investment, the

reduction of government subsidies and thedismantling of State planning.

BulgariaBulgaria is one of the East European coun,

tries whose economy was most closely in.tegrated with the Soviet Union and itsCornecon partners. More than 75% of itsforeign trade waS with Comecon. It will

therefore need to undertake major efforts toreorient its economy to free market forces.

Bulgaria s foreign debt at USD 1 056 percapita is well above the level ofCzechoslovakia but below that of Polandand Hungary.

The poor state of the Bulgarian economy is amajor drawback to reform. The new govern-ment, elected in June 1990, has to contendwith inefficiency, shortages and corruptionas well as an absence of rei iable statistics onwhich to base reforms.

Sofia: a mass demonstration (Photo: F. Zecchin, Magnum)

Therefore, the reform process is likely to beslower in Bulgaria than in Poland , Hungaryand Czechoslovakia. This could lead to a gapwidening between the pace of its integrationinto the free-market European economy andthat of the others. Bulgaria will need activelyto woo Western aid and investment; other-

wise Western partners will concentrate theirefforts on more fast-track candidates.

Bulgaria is the only country where thereformed Communist party ~ now calledthe Bulgarian Socialist Party - emerged theclear winner of the first free elections since

ELECTIONS IN BULGARIAJUNE 1990

% of Seatsvote

Bulgarian SocialistParty (formerlyCommunists)

Union of Demo-cratic Forces(anti-Communistalliance)

Agrarian Union(farmers)

Movement for Rightsand Freedom

(ethnic Turks)

Other

211

144

World War II (see below). These electionstook place in June 1990.This election-result is because theparty itselftook the lead in the political reform processwhen it forced the resignation of TodorZhivkov, the long-serving party leader, inNovember 1989. It is also due to the fact thatthe opposition groups are less well organ-ized than in other Central and East Europeancountries.

Another reason is the country s relatively

weak political culture and the difference bet-ween conservative rural areas , which sup-ported the reformed Communists, and theurban population particularly in Sofia

who backed the Union of DemocraticForces.

RomaniaEvents in Romania have confirmed predic-tions that itwill be the country of Central andEastern Europe that wi II experience most dif-ficulty in restoring democratic institutionsand political and economic stability. Noother country of the region experienced the

degree of totalitarianism imposed by theCeausescu regime.

The rebuilding of political and economicstructures will take time and could lead toconsiderable instability. Because of thetotalitarian past, few individuals have anylegitimacy or credibility to lead the countryforward. These problems have certainlyvisited the ruling National Salvation Front.Although the Front won the country s firstfree election for 40 years in May 1990 (seebelow), suspicion and doubt have lingeredabout its commitment to democracy amongopposition groups.

Externally, Romania s trading partners andpotential suppliers of financial assistance

have also had problems in coming to termswith the country s reform process. Thesignature of Romania s trade agreement withthe Community, concluded in May 1990was delayed because of the way the govern"ment handled post-election demonstrations.This was reminiscent of earlier problemsover human rights in Romania whichperiodically marred the application of the1980 EC-Romania cooperation agreement.

ELECTIONS IN ROMANIAMAY 1990

% of Seatsvote

National Salvation

Front (ex-and not-so-ex-Communistsmilitary officers

former dissidents) 233

DemocraticHungarian Union

Liberals (centre-right)

Greens

National Peasants

(farmers)

Others

Bucharest: Quiet, please

...

Action! (Photo: Dennis Stock, Magnum)

The one bright spot is the country s negligi-. ble foreign debt. It could have access to

multilateral or bilateral credits at an earlydate. It is a member of the IMF, the WorldBank and GATT. But it is short of trained peo-ple with the necessary skills to put a reformprogramme in place.

YugoslaviaYugoslavia is the only country of Central andEastern Europe not to have held multipartyelections since the wave of political andeconomic reforms swept through the region.The main reason is that the reform process ishandicapped by the difficult relations bet-ween the country s six constituent republics.

The European Community and the West ingeneral have traditionally treated Yugoslaviaas a case apart. Its particular brand ofeconomic self-management was seen at one

stage as a potential ' third way' between rigid"Iy-planned Communism and the marketeconomy. Its refusal to become part of theSoviet economic or military sphere of in-fluence gave it a special relationship as aCommunist State with the EC

Relations go back to 1970 when the first non"preferential trade agreement was signed.This was upgraded to a special cooperationagreement in 1980 under which Yugoslav

exports got preferential access to the Com-munity market. Yugoslavia also qualified forloans from the European Investment Bank.

Ifpolitical reform is proving difficult becauseof ethnic considerations, some economicreforms have been propelled forward by the

depth of the country s economic crisis.Severe internal difficulties coupled withfour-digit inflation in 1989 led to the in-troduction atthe start of 1990 of a wide-rang-

ing economic reform programme, introduc"ing tight monetary and budget controls andthe convertibility of the dinar.

The European Commission proposed athree-level improvement in the Communi-ty' s supportfor Yugoslavia in a paper submit-ted to the Council of Ministers in May 1990.One of the ideas ~ the extension of thePh are programme to cover Yugoslavia andthe rest of Central and Eastern Europe - hasalready gone through.

The Commission s other two proposals arefor the near-doubling of the amount of EIB

loans to Yugoslavia from ECU 550 million(1986-90) to ECU 900 million for the fiveyears 1991-96 and for the negotiation of anew Association agreement.

Yugoslavia is thus the first country to be of-fered this new type of agreement with theCommunity. Its terms go beyond free tradeto cover additional financial support, in-dustrial and technical cooperation, apolitical dialogue and the possibility ofsubsequent moves to free movement of peo-ple, services and capital.

Zagreb: Square of the Republic (Photo: Ian Berry, Magnum)

1321

THE EC'S RELATIONS WITH THE SOVIET UNION

As a superpower, albeit a diminished onethe Soviet Union s relations with the Com-munity are developing differently from thoseof other East European countries. Because ofthe sheer size of the Soviet economy, theCommunity has decided it cannot offer theUSSR the same kind of special associationagreements proposed for the others.

Present trade relations between the Com-munity and Moscow are based on the Tradeand Economic Cooperation Agreementsigned in December 1989 and which cameinto effect on 1 April 1990. Under its termseach side grants the other most-favoured-na-tion (MFN) status for their exports. The Com-munity is committed to removing all quotarestrictions on its imports from the SovietUnion by 1995.

The Soviet Union has agreed to improve itsmarket' s transparency to ensure better ac-cess for EC goods and has given guaranteeson the repatriation of dividends and profitsgenerated by fi rms setup in the Soviet Union.The economic cooperation section of theagreement covers a wide range of sectorsfrom standardization, energy and the en"vironment to financial cooperation andfarming.The second major element in EC-Soviet rela-tions is the Community' s efforts to prepare afinancial aid and structural support pro-gramme for the USSR. These were launchedat the Dublin Summitofthe European Coun"cil on 26 June 1990.The programme is divided into two parts short-term credits and medium-term struc-

Mr Shevardnadze, the Soviet Foreign Minister, visiting the European Parliament in December 1989

tural assistance. The Commission s leading

role was confirmed when its president, MrJacques Delors, visited Moscow in July 1990.

The Community' s willingness to give finan-cial and other support for economic reformin the Soviet Union is conditioned inter alia

by a recognition of the central role played bypresidentMikhail Gorbachev in allowingtherest of Eastern Europe to free itself fromSoviet and Communist dominance. Havingcreated the division of Europe in the firstplace, the Russians have been instrumentalin breaking down the barriers again.

At the same time, they have tried throughglasnost and perestroika to bring about a cer-tain level of economic and political reformsat home. But in so doing, they havereawakened some powerful sleeping forcesand given birth to some new ones.The process of economic reform perestroika and the introduction of amarket-related economy is advancing slowlyin the face of considerable resistance.Politically, the authorities are confrontedwith a double challenge: the huge na-

tionalities problem and the need to createmore democratic and pluralist structures. Allthree issues are inextricably intertwined.

Moscow now faces secessionist pressuresfrom most of its constituent republics. Themovement began in the small rebelliousBaltic States and spread rapidly to theMuslim south and then to the biggest

republics, the Ukraine and the RussianFederation itself.

The authorities are drafting a new constitu-tion that will grant greater autonomy to therepublics in the hope of keeping most ofthem within the current union. A neweconomic reform programme was publishedin September 1990.

In the mean time, secessionists vie with

federalists political conservatives with

radical reformers and economic innovatorswith entrenched Communist-vested in-terests. It is against this background that theCommunity' s task in seeking to help theeconomic and political liberalization of theSoviet Union should be seen.

CENTRAL AND EASTERN EUROPEAN PERCEPTIONS OF THEEUROPEAN COMMUNITY

The European Communi.ty has whatmight be termed a mystical attraction andis seen as an ideal by the people of Cen-tral and Eastern Europe. This is revealedby opinion polls carried out Czechoslovakia, in Moscow and in theEuropean territory of the Soviet Unionand by a survey conducted in Lithuaniaby Gallup UK and the Sociologicallaboratory of the University of Vilnius.All these surveys were conducted in1990.

Three Muscovites in five, two Sovietcitizens in four and 86% of East Germans

had heard of the European Community.All the Czechs and Slovaks questionedclaimed to have heard of it.More than a third of Soviet intervieweeswere aware of President Mitterrand' s pro-posal for a Pan-European Confederationgrouping all European States with morethan one political party, free electionsfreedom of speech and freedom of themedia.

Eurobarometer No June 1990

FURTHER READING

EC-PUBLICATIONS

Action plan - Coordinated assistance fromthe Group of 24 to Bulgaria, Czechoslovakia,GDR, Romania and YugoslaviaBrussels, EC, Commission , 1990, 7 pp.(Doc SEC (90) 843 final)

Agreement between the EEC and theEuropean Atomic Energy Community and theUSSR on trade and commercial and economiccooperation. Agreement in the form of anexchange of letters between the EEC and theUSSR concerning ' TestausschreibungLuxembourg, EC, Council, Commission1990, 20 pp.(OJ L 68, 15.3.1990)

Communication on the Community'relations with the countries of Central andEastern Europe - The role of telecommuni-cationsBrussels, EC, Commission, 1990, 18 pp.(Doc COM (90) 258 final)

D 'Economic transformation in Hungary andPoland'European Economy, No

1990, 215 pp.

Implications of recent changes in Central andEastern Europe for the Community s relationswith the countries concerned, Brussels, EC

Commission, 1990, 8 pp.(Doc SEC (90) 111 final)

D 'Our European neighboursVocational training, No

1989, 64 pp.

Proposal for a Council decision establishing atrans-European mobility scheme for universitystudies 'TempusBrussels, EC, Commission , 1990, 18 pp.(Doc COM (90) 16 final)

Report on economic and trade relationsbetween the European Community and thePeople s Republic of Poland,Luxembourg, EC, European ParliamentCommittee on External Economic RelationsRapporteur: Eusebio Cano Pinto1990, 32 pp., (Doc EP (90) 1)

Report on the political aspects of the situationin PolandLuxembourg, EC, European ParliamentPolitical Affairs Committee,Rapporteur: Gerd Walter,1990, 8 pp. , (Doc EP (90) 22)

Report on the significance of the agreementbetween the EEC and the GDR on trade andcommercial and economic cooperationLuxembourg, EC, European ParliamentCommittee on External Economic RelationsRapporteur: Henry Chabert1990, 8 pp. , (Doc EP (90) 57)

The Community and German unificationBrussels, EC, Commission , 1990, 12 pp.,(Doc SEC (90) 751 final)

The Community and German unification:implications of the Staatsvertrag,Brussels, EC, Commission , 1990, 14 pp.(Doc SEC (90) 1138 final)

The Community and the European Bank forReconstruction and Development-Proposal for a Council decision on theconclusion of the articles of agreementestablishing a European Bank forReconstruction and DevelopmentBrussels, EC, Commission , 1990(Doc COM (90) 190 final)

The development of the Community'relations with the countries of Central andEastern EuropeBrussels, EC, Commission , 1990, 11 pp.(Doc SEC (90) 196 final)

The development of the Community'relations with the countries of Central andEastern Europe,Brussels, Ec, Cornmission , 1990, 7 pp.(Doc SEC (90) 717 final)

Three years to the completion of the

internal market: a first assessment of itsimpactBrussels, EC, Commission, 1990, 7 pp.(Doc SEC (90) 494 final)

OTHER PUBLICATIONS

Aganbegjan, Abel G. , Ciocca, Pierluigi:.Pere$trojka e ri$trutturazione produttivaesperienze e pro$pettive economiche inUnione sovietica e in ItalianAtti del convegno italo-sovietico,

11 giugno 1988, Mulino, Bologna, 1989344 pag.

Artisien , Patrick:Yugoslavia to 1993 back from the brink?Economist Intelligence Unit, London , 1989.

Artner, Anna Maria; Babosik, Maria; Hamorijeno; Toeroek, Adam:

Economic development of the EC and itsimpact on the EC-Hungarian relations

Facts and trends,Thesis, Budapest University, 1986, 230 pp.

Assetto, Valerie j.The Soviet Bloc in the IMF and the IBRDWestview Press, Boulder, 1988, 208 pp.

Bergson , Abram:Planning and performance in socialisteconomies, the USSR and Eastern Europe

Unwin Hyman , Boston , 1989, 304 pp.

Bieszki , Miroslaw; Rath , Herbert:D ' Foreign capital investment in Poland

Emerging prospects for German-Polish jointventures under the new lawManagement International Review, 198929/04, pp. 45-67.

Bogomolov, Oleg:Socialisme et competitivite, les pays de/'Est dans /'economie mondiale,Presses de la Fondation nationale dessciences politiques, Paris, 1989, 247 p.

Duverger, Maurice:Ie lievre liberal et la tortueeuropeenne,Albin Michel , Paris, 1990, 245 p.

Hopkin$on , Nicholas:D 'The impact of Soviet reforms on Eastern

Europe: economic and political change andthe response of the West'Wilton Park Conference No 32831 October to 4 November 1988Wilton Park Papers,Steyning, 1988, 30 pp.

Hummeluhr, Niels; M011er, j. 0rstmm:EF og Uddannelse-en Handbog: EF og

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