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Bleak Future For Ex-Soviet Republics

by Gustavo Capdevila

No real improvement seen for decades
(IPS) GENEVA -- The economic decay of the former Soviet republics has reached such an extreme that they are, on average, 40 percent below their wealth levels of 1989, the year the region's socialist regimes collapsed.

The panorama for the former communist bloc is complicated by the fact that the hesitant recovery insinuated in 2000 threatens to fade in the face of the unfavorable economic forecasts for Western Europe and the uncertain fates of the United States and Japan.

The United Nations Economic Commission for Europe (UNECE), a Geneva-based agency, warns that the retraction of the leading world economies could jeopardize Eastern Europe and the republics that were part of the now-defunct Soviet Union, united today in the Commonwealth of Independent States (CIS).

For some economies of the CIS, last year was the first in a decade in which they recorded positive growth.

For the first time since the start of their economic and political transformation, the former centrally planned economies of Eastern Europe and the former Soviet Union were all growing in 2000, according to UNECE.

The combined gross domestic product (GDP) of the region grew 6 percent last year, more than a full point above the world average of 4.7 percent.

The determining factor behind this growth was the unexpected performance of the Russian Federation's economy, which presented a strong recovery with its 7.7 percent GDP expansion, the highest in more than 30 years.

But the best economic performance in recent years were seen in Turkmenistan, with 16 percent GDP growth in 1999 and 17.6 percent in 2000, and Azerbaijan, with 7.4 percent in 1999 and 11.4 percent last year.

The two countries' merchandise exports rose dramatically in that period as well. Azerbaijan's external sales grew 53.3 percent in 1999 and 235.7 percent in 2000. Turkmenistan recorded a 99.9 percent hike in 1999 and 92 percent last year.

UNECE officials related these exceptional increases in export revenue to the rise in oil prices, though stressed that these were short-lived phenomena due to the subsequent fluctuations in the international petroleum market.

In its Economic Survey of Europe, released today, the UNECE issues a wake-up call about the true scope of the recovery recorded last year in transitional economies.

The strong growth is "positive and encouraging," says the UN agency, but "it must be borne in mind that for a number of countries this represents only a meager recovery after a long economic slump."

After 10 years of reforms, just four of the region's economies were ever able to surpass the GDP levels they enjoyed prior to the transformation process: Hungary did so in 2000, Poland in 1995, Slovakia in 1999 and Slovenia in 1998.

Meanwhile, the CIS economies are still an average 40 percent below their GDP levels of 1989, when the socialist regimes of the region disintegrated.

In several of the 11 CIS countries, the GDP for last year was "less than half of what was being produced a decade ago," says the UN agency's report.

And the outlook is not encouraging. The UNECE points out the drop in output and decline in income for these economies "are of such magnitude that it will probably take many years, if not decades, before the population at large begins to sense the positive outcomes of the reform process."



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Albion Monitor June 4, 2001 (http://www.monitor.net/monitor)

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