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Eastern Europe and a
Global Financial Crash

by Dr. Jan Carnogursky

Here is the speech of Dr. Jan Carnogursky of Slovakia to EIR's seminar in Berlin, Germany on Jan. 12-13, 2005. He was premier of the Slovak republic in the first post-communist Czechoslovak government; and later Justice Minister of the Republic of Slovakia, after Slovakia and the Czech Republic split. He is also a leader of Slovakia's Christian Democratic party, KHD. He was introduced by conference chairman Michael Liebig.

Michael Liebig: I would ask Dr. Carnogursky to address us now.

Dr. Jan Carnogursky: Thank you. I'll try to tell something about the situation in post-Communist Central-Eastern European countries, after the collapse of communism.

First, a few sentences about the ideological and political situation in these countries. After the collapse of communism, these countries reappeared on the political map, I would say, completely unprepared for the new situation that they met. Communism collapsed, because of the negative approach of the population toward communist authorities and regime before, but, they had no philosophical, ideological, political concept what to do after. Political concept, of course, freedom of establishing of political parties should be established; free elections; and joining Europe in rather unclear vision.

In this situation of unpreparedness a situation was repeated that occurred in the history of these countries many times, in the last centuries: That means we were taking over the ideas from the West—many times rather crazy ideas. But, I repeat, it did not occur for the first time! When we trace back with, say, Voltaire's ideas in Russia of Caterina II, or later, the communism itself! And now, or in '90s, various types of shock therapy by Chicago University's economics school, that provided these countries with special economic conceptions.

Even post-communist parties renamed in some kind of social democratic and socialist parties in these countries, even these parties did not have any different conception of management of society. Even these parties were in competition, on how low should taxes be set. Or how fast to join NATO, for example, Polish party, even Hungarian party. In Slovakia, for example, the Minister of Defense was, when Slovakia applied for NATO membership, appointed by this post-communist party!

Now we see that these ex-communist countries are in competition among themselves, which country would have the lowest flat tax: Russia has 13%; Slovakia, 19%; Romania, I read in newspapers is preparing after next year 16% flat tax. Privatization of pensions in Slovakia does exist, already, from this year. In other countries, it's discussed. The privatization of bigger—not only bigger, but all enterprises—has occurred. And a domination of ideology that anything that the state is doing is worse, than what private companies are doing.

That's the legacy of getting free of communism! Getting free of communism, and of unpreparedness of these societies for the new situation.

Nevertheless, I feel obliged to say some pluses, some positive aspects of the situation in these countries: Maybe, in these countries there is less "political correctness" than in Western Europe, maybe even America. As example for this, I could say that, Mr. LaRouche is able to appear in an official or semi-official conference in Moscow, but probably not in Berlin, or in Paris, or somewhere in U.S.

And another, the relations to the EU: I know that in, say, the Schiller Institute, —the relation toward EU is rather controversial, rather negative. But I would say that the perspective of EU membership for these countries at least suppressed various nationalistic dangers in these countries after the collapse of communism. And in this way, the development of these countries in the last 10, 15 years, made less conflicts especially among these countries, than would be the case without this perspective of EU membership.

But, the conclusion is, that in these countries, is not possible, or no perspective that a healthy social conception would win and dominate. Rather, if such a conception would win in a Western country, it could rather easily come over to these former Eastern bloc countries.

The single worst event, or step in these countries, I consider the NATO enlargement or NATO membership of these countries, especially for two reasons. The argumentation of governments or non-governmental organizations paid by the West, for NATO membership was, that with NATO membership even we would be more secure than without, and that security and defense would be cheaper than without NATO membership. The reality now is just opposite. First, none of these countries was in danger of military attack by armies, that could be defended by, say, NATO or a security defense alliance. And the money provided for the armies is now—the biggest raise of money in these countries, again with the argumentation that we must fulfill the demands of NATO. And NATO has demanded that at least 2% of GDP should be paid for army.

The negative aspects of NATO membership, I consider are twofold: First, NATO membership, or an eastward expansion of NATO has deepened the division of Europe, only moving the border of the division to the East, because Russia considers NATO as more or less a danger. And, in reality, it could be a danger in a crisis situation, because, when a NATO military base is somewhere in Poland, or in the Baltic countries, or in Hungary, it's just a question of days, when weapons for attack could be moved onto this military base.

And second, NATO membership is used in these countries, as a pretext to engage these countries into foreign military adventures—for example, Slovak soldiers are in Iraq. And the argumentation of the Slovak government for sending these soldiers to Iraq was—they were sending them in 2003, when Slovakia was formerly not yet a NATO member—but the argumentation of the government was, that we must behave ourselves as if we were already NATO members, and that's why we must send our soldiers to Iraq (and to Afghanistan, as well).

And, in Hungary, when the NATO military base was established back in the '90s, during the attack on Yugoslavia, the argumentation was, it is established just for this campaign against Yugoslavia—but since that time, the military base still does exist in Hungary. And before the campaign in Iraq, the base in Hungary was used for training Iraqi opposition people, without even asking the Hungarian government, if NATO can do it or not.

So, the worst single step after the collapse of communism, I think, was NATO expansion.

The crucial country, of this group of countries (except Russia, of course) is Poland. And Poland is the heavyweight of these countries, both politically, by its size, etc. And practically, Poland is able to set signals for other countries—I mean Czech Republic, Slovakia, Hungary, Romania, even maybe Baltic countries; I do not know how far for Ukraine. But, the problem with Poland was, historically, that of a mentality of being pressed by Russia and Germany. And in these years, it would be an historical occasion for Poland to overcome this mentality of being pressed by Russia and Germany.

And how far Poland would use this occasion, it is very, very important for the development in Central Europe. As I see it, relations between Poland and Germany are quite good, and are even developing quite well. But, relations between Poland and Russia, it is not the case. Under some governments, especially in Poland, it goes better; under other governments, worse. Maybe this engagement of activities of Poland, as a country and various Polish officials, including President Kwasniewski in Ukraine, now, on the side of Yushchenko, did harm using of this opportunity to get rid of this mentality of being pressed between Russia and Germany. And that's a blow to all of the countries of former Central East Europe. Poland opposed the pressure of Russia and Germany (Prussia) in the past by closing alliances with far away countries. With Napoleonic France in the beginning of 19-th century or Great Britain - France in the 30-ties of the 20-th century. Both alliances were a failure. Poland lost with Napoleon and treaties with Britain and France in the last century led only to a "funny war" of this countries against nazi-Germany in September 1939.

After the collapse of communism Poland is the best ally of USA in Central East Europe. Will have this bet on a far away country now a better outcome than in the past?

Central East Europe is able to overcome — take it as academic, intellectual consideration now — easier, better, faster blows by various crisis situations, social crisis situations, for example like ones created by a possible financial crash.

Let's take as an example Russia: Russia came quite well through the dissolution of the Soviet Union, losing some republics, which are now countries, such as Kazakstan, Central Asia, Ukraine, Belarus, etc. Then, went quite well through financial crash in '98. I could add, it went quite well through the Presidency of Boris Yeltsin, but Russians must say if it's true or not.

[from the audience: "On all three points that you mentioned, it was a complete disaster: financial, losing the former republics, and on the third point. Absolute disaster for Russia."].

Yes, but the Russians look quite well, now—after these disasters. ["You think so? With mass poverty— (cross-talk) My pension in Russia is below—my pension as a professor—is below the subsistence level. So, we can't look well at all. You know, in my country, professors are poor, and they are on the verge of poverty. I'm sorry, but Russia doesn't look well at all."]

I'm sorry: I did not want to make jokes about the sacrifices of Russians. ["It's not a joke. But that's the—."] Yes, yes. I agree. I agree.

My conclusion is, that Central-East European countries are not able by their own endeavor to overcome the present social-political-economic situation. They could overcome the situation under pressure, more or less from outside. And such a pressure they could overcome, rather easily, or maybe not as tragically as it could be. And that's why the only hope for these countries is a global financial crash.

Thank you. [warm applause]

Lyndon LaRouche: [laughing] Optimistic, nonetheless.