The Vienna Institute Monthly Report 1998/6
SUMMARIES

 

The CIS in 1997 - early 1998: Vulnerable stabilizations, anaemic growth, Asian fallout
In 1997 and the first months of 1998 the CIS countries continued to grapple with uncompetitive structures and behaviours left over from the Soviet past. The CIS as a whole and Russia in particular registered positive GDP growth in 1997 for the first time since 1990, inflation fell and real incomes rose in all countries which reported them. The CIS remains a political shell; interstate trade, dominated by links with Russia, shrank in 1997. CIS foreign exports stagnated in 1997 and plunged in 1Q 1998.
Monetary indicators improved for most countries year-on-year, and most survived the October round of the Asian crisis with their currencies if not stock markets intact - albeit at the cost of sizeable interest rate hikes that have not yet been reversed. Restructuring and budget-hardening disappointed, and the arrears crisis continued to distort results in both state and non-state sectors. Foreign trade is now suffering rather than profiting from its dependence on primary products, and Russia is seeing its formerly stellar trade surplus eroded by low oil prices. Investment in the CIS hit a seven-year low in 1997; FDI is being held back by a slew of factors. The second round of the Asian crisis and the failure of tax collections to improve spooked CIS stock and currency markets in May/June 1998; the Russian rouble is being defended by interest rate hikes, the stock market has slumped to levels not seen since early 1996, and outcomes are in jeopardy.
The change in risk perception has forced up interest rates at which the CIS countries can borrow at home and abroad. Since the Asian crisis broke, many states, notably Russia and Ukraine, have been forced to defend their currencies by hiking yields on domestic treasury bills to around 50% per annum, and Russia in May has just tripled them to 150%. Countries basking in newly-won ratings from international rating agencies granted on account of good inflation figures and stable exchange rates had to pay rising premia over LIBOR to borrow at all on western markets. A slew of eurobond issues planned by various Russian and Ukrainian regions, cities and large enterprises have been shelved as too expensive, and ratings have been cut. Ukraine's currency is vulnerable to attack should its T-bills not be rolled over.
 

Agriculture 1997: Slight growth in the CEECs, subsiding decline in Russia and Ukraine
Following the 1996 stagnation, total agricultural output in the CEECs rose by 1.7% in 1997. In Russia agricultural production stagnated, in Ukraine it dropped by 1.9%, after many years of massive declines in both countries. The 1997 agro-food trade of the CEECs showed a surplus of some USD 0.5 bn, after balanced trade in 1996. Russia remained the largest net agro-food importer of over USD 8 bn. Agricultural reforms in Russia and Ukraine have remained far behind those in the CEECs, where over 90% of agricultural land is now in private hands. In preparation for EU membership, the first-round candidates have started introducing measures aimed at harmonizing their policies with the CAP.
 

Effects of staying out of the EU
The borders of the future European Union have to be drawn somewhere. Where they are or will eventually end up to be depends on the EU, but also on the prospective member states, integration being a contractual issue. In addition, the EU is a complex integration which defines a number of different types of affiliations. Taking both market and political integration into account, a complex picture of members, outsiders, opt-outs, left-outs and stay-outs emerges. Those different statuses are caused by and have consequences for both trade patterns and economic policy considerations. A number of countries staying out of the EU integration for the moment or indefinitely follow economic polices divergent from those followed in the EU with significant additional costs.
 

Countdown: Online information, documentation and communication centre on the European Union's eastern enlargement
The Vienna Institute for International Economic Studies (WIIW) has just installed the first operational bloc of an online information, documentation and communication centre on the European Union's eastern enlargement. The new facility, under the name 'Countdown', is available under the Internet address:

http://wiiwsv.wsr.ac.at/Countdown/ Countdown is run by WIIW and is based on an international network of co-operating institutions in the associated countries and member countries of the EU. Countdown was called into being with the intention to help fill the information and communication gap that prevails in this research field as yet. The new facility will have two parts, Documentation (already partially operational) and Communication (under construction).
In the Documentation part, a systematic collection and classification of available 'EU eastern enlargement'-relevant information takes place. Subject to this process is literature published on the topic, as well as lists of experts and institutions engaged in research on or dealing with practical problems of their respective country's accession to the EU. In addition, information on conferences recently held or planned to be held on the topic is redistributed.
For easy search 17 areas were identified to broadly cover the most important aspects of EU eastern enlargement. The search engine of Countdown enables users to 'look around' in their specific topic either in the literature, or the list of experts or conferences. The documentation is continuously updated by co-operating institutes. In the present, first stage of the project, the facility covers eight of the ten associated countries and Austria. Through links from the Countdown homepage users may contact national Countdown teams in Austria, Bulgaria, the Czech Republic, Estonia, Hungary, Lithuania, Poland, Slovakia and Slovenia. The WIIW has letters of intent from 13 additional research sites both from the EU and Central and Eastern Europe to co-operate in the project. An extension of coverage to all associated countries and all EU member states is planned.
In the Communication part, as a first step all-round inquiries are planned. Questions of outstanding importance will be raised to members of the expert community. The responses and comments to responses in the framework of a moderated discussion list will hopefully contribute to solving the problems emerging in the difficult terrain of the EU's eastern enlargement. Later on, the establishment of an electronic journal is planned. In this journal enlargement-relevant articles, comments on the articles and comments on comments or the authors' response to comments will be made available. In a third segment of the communication forum, called 'Nest', niches will be opened for discussions, mutual help and all kinds of communication for professional and non-professional groups whose members are involved or interested in a specific aspect of the EU's eastern enlargement.
 
 

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