|EU-10 GDP Growth|
|Freedom House Democracy Scores|
Success Factors for Passing the Stress Test
- In general, the EU-10 states with more strongly embedded democratic institutions demonstrated a higher capacity for effective policy-making and implementation in confronting the economic crisis. Thus, with the exception of Hungary, higher levels of pre-crisis democratic consolidation largely correlated with more effective handling of the economic crisis per se.
- States with higher pre-crisis democratic institutions generally experienced either no damage or only minimal damage to their democracy scores, even in the Baltic countries, where the impact of the economic crisis was most severe. Again, the exception is Hungary, although Slovakia also deviated somewhat from the general pattern, as described below.
- Individual leaders made a major difference in several countries. Some of the best results involved strong, assertive leaders with a solid commitment to democracy and a penchant for courageous behavior (e. g., Prime Ministers Ansip of Estonia, Kubilius of Lithuania and Radičova of Slovakia, and President Zalters of Latvia). In Hungary, Viktor Orban has also made a major difference politically, albeit in this case on the negative side.
- The leverage that attaches to external financial assistance, along with additional political pressures from the EU, were important factors for success on both the economic and political fronts. Brussels, often working in tandem with the IMF, the EBRD and the World Bank, provided critical financial support, strong economic policy advice and, in some cases, political suasion. And the EU/IFI framework also provided political cover for needed reforms as well as greater security for investors, both foreign and domestic.
- Political, strategic and cultural linkages to the West were also significant factors favoring positive political performance. In most of these countries, the widespread public desire to be a part of the West was a strong factor favoring democracy. Again, Hungary is the exception. However, the power of this linkage appears to decline as one moves away from the EU core and from Scandinavia (with whom the northern tier of the EU-10 have close ties). The measures of democratic performance decline as one moves southeast. They are particularly weak for Romania and Bulgaria, two countries with arguably lesser linkages to the West than those enjoyed by the other new post-communist EU members.