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Erase the CEE Label: Trying to Escape from the Trouble Zone

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Libere Paroli

Written by Dániel Antal

I was bemused in the early 90s when there was a wave of thought in the Czech Republic which tried to prove that the country does not belong historically to Central Europe and it is indeed a Western European country.

Now, as the financial and economic crisis takes its heaviest toll in the Central and Eastern European region, a few countries try to get rid of the CEE label that makes their government treasury bonds hard to sell.

Earlier this week Czech economic policymakers tried to convince journalist hard that their country has nothing in common with Hungary, which indeed had a much less disciplined fiscal policy in the last decade. Now I read a Polish blog (via Julien) that Poland is not a CEE country. According to the Polandian, “Austria is as related to Central Europe as it is to China”. Even if you assume that somebody has never visited neither Austria nor China from Poland this is a very funny statement.

I also prefer to draw a line between Central Europe and Eastern Europe, but I think the CEE phrase is still very much useful. The former Habsburg Empire, and countries that are at least in some part used to belong to it are economically, culturally, historically very much tied to each other. This includes of course Austria, Hungary, the Czech and Slovak Republics, and also Slovenia, Croatia, Romania and Poland; but also somewhat Ukraine, Serbia and Bosnia-Herzegovina. The Austrian financial system has an exposure to these countries which amounts to 80% the size of Austrian GDP. Albeit Austria is definitely the core of this region and much richer, the living standards, consumer habits in the other countries are rather similar. In Vienna, Hungarian, Czech and Slovak languages are widely spoken. The former Habsburg group usually votes together in the EU. Oh yes, and Phare was named after Poland and Hungary, and there is the largely defunct but still existing Visegrad Group. (This argument is shared in a different form by Leopolis and Julien Frisch: the CEE bloc is indeed a useful phrase from a political economy point of view).

Probably you could rightly claim that the Baltic Republics with their strong economic, cultural and historic ties to Scandinavia and Russia are different, and modern Poland is indeed a mix of everything, but I think the CEE phrase, as well as Central Europe and Eastern Europe will remain useful in the next few centuries. With a pure re-branding none of these countries will be able to ditch their shared history on and destiny.

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