Bubbling under the surface: The role of western public finance in the crisis hitting central and eastern Europe

Study    |    14 May 2009

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The financial and economic crisis unravelling across the world economy has fundamentally changed economic policy imperatives for states and international financial institutions, including those operating at the European level. This situation offers the opportunity to articulate policies favourable to progressive social and environmental aims as integral parts of effective and transformative plans for economic recovery.

While todays policy makers are unlikely to be moved by such arguments at this point, broader layers of social actors engaged in debates about the crisis most definitely will. This report seeks to provide guidance for their mobilisation by considering the context, formulation and delivery of crisis response policies by the EC, the EIB and the EBRD in relation to the CEE economies.

It is too early to be able to identify exactly how different institutions will attempt to pursue these imperatives. But it is possible to identify the issues and tendencies framing the work of particular institutions by examining their policies and commitments, with special regard to their responses to the crisis.

In this sense the current situation offers the opportunity to articulate policies favourable to progressive social and environmental aims as integral parts of effective and transformative plans for economic recovery. While today’s policy makers are unlikely to be moved by such arguments at this point, broader layers of social actors engaged in debates about the crisis most definitely will.

This report seeks to provide guidance for their mobilisation. It does so by considering the context, formulation and delivery of crisis response policies by the EC, the EIB and the EBRD in relation to the CEE economies. It does so by offering a detailed discussion of the crisis and its impact in European and CEE economies, and a series of individual discussions on each institution based on recent work, policy commitments, announced policy responses, and recent policy implementation.