Developments in the former East Bloc paralleled those in Russia in important ways. The former satellites worked to replace state planning and socialism with market mechanisms and private property. Western-style electoral politics also took hold.

New leaders across the former East Bloc faced similar economic problems: how to restructure Communist economic systems and move state-owned businesses and property into private hands. Under Soviet-style communism, central planners determined production and distribution goals and often set wage and price controls; now former East Bloc countries would adopt market-based economic systems. In addition, industries, businesses, and farms, considered the “people’s property” and managed by the state in the name of the entire population, would now be privatized.

The methods of restructuring and privatization varied from country to country. Poland’s new leaders turned to “shock therapy,” the most rapid and comprehensive form of economic transformation, advocated by neoliberal Western institutions, including the International Monetary Fund and the World Bank. Starting in 1990, the Poles liberalized prices and trade policies, raised taxes, cut spending to reduce budget deficits, and quickly sold state-owned industries to private investors. As they would in Russia a few years later, these radical moves at first brought high inflation and a rapid decline in living standards, which generated public protests and strikes. But because the plan had the West’s approval, Poland received Western financial support that eased the pain of transition. By the end of the decade, the country had one of the strongest economies in the former East Bloc.

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Other countries followed alternate paths. Czechoslovakia took a more gradual approach. As in Russia, the Czechoslovak state issued vouchers to its citizens, which they could use to bid for shares in privatized companies. In Slovenia, one of the countries carved out of the former Yugoslavia, privatization included the transfer of up to 60 percent of company ownership to employees. In Estonia, reformers experimented with employee ownership, vouchers, and worker cooperatives. Compared to Poland’s approach, privatization in all three countries was slower, continued more practices from the Communist past, and caused less social disruption.

Economic growth in the former Communist countries was varied, but most observers agreed that Poland, the Czech Republic, and Hungary were the most successful. Each met the critical challenge of economic reconstruction more successfully than did Russia, and each could claim to be the economic leader in the former East Bloc, depending on the criteria selected. The reasons for these successes included considerable experience with limited market reforms before 1989, flexibility and lack of dogmatism in government policy, and an enthusiastic embrace of capitalism by a new entrepreneurial class. In its first five years of reform, Poland created twice as many new businesses as did Russia in a comparable period, despite having only a quarter of Russia’s population.

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Poland, the Czech Republic, and Hungary also did far better than Russia in creating new civic institutions, legal systems, and independent media outlets that reinforced political freedom and national revival. Lech Wałęsa in Poland and Václav Havel in Czechoslovakia were elected presidents of their countries and proved as remarkable in power as in opposition (see Chapter 29). After Czechoslovakia’s Velvet Revolution in 1989, the Czechoslovak parliament accepted a “velvet divorce” in 1993, when Slovakian nationalists wanted to break off and form their own state, creating the separate Czech and Slovak Republics. Above all, and in sharp contrast to Russia, the popular goal of adopting the liberal democratic values of western Europe reinforced political moderation and compromise. In 1999 Poland, Hungary, and the Czech Republic were accepted into NATO, and in 2004 they and Slovakia gained admission to the European Union (EU) (see “The New European Union”).

Romania and Bulgaria lagged behind in the postcommunist transition. Western traditions were weaker there, and both countries were poorer than their more successful neighbors. Romania and Bulgaria did make progress after 2000, however, and joined NATO in 2004 and the EU in 2007.

The social consequences of rebuilding the former East Bloc were similar to those in Russia, though people were generally spared the widespread shortages and misery that characterized Russia in the 1990s. Ordinary citizens and the elderly were once again the big losers, while the young and former Communist Party members were the big winners. Inequalities between richer and poorer regions also increased. Capital cities such as Warsaw, Prague, and Budapest concentrated wealth, power, and opportunity as never before, while provincial centers stagnated and old industrial areas declined. Crime, corruption, and gangsterism increased in both the streets and the executive suites.

Though few former East Bloc residents wanted to return to communism, some expressed longings for the stability of the old system. They missed the guaranteed jobs and generous social benefits provided by the Communist state, and they found the individualism and competitiveness of capitalism cold and difficult. One Russian woman living on a pension of $448 a month in 2003 summed up the dilemma: “What we want is for our life to be as easy as it was in the Soviet Union, with the guarantee of a good, stable future and low prices — and at the same time this freedom that did not exist before.”2

The question of whether or how to punish former Communist leaders who had committed political crimes or abused human rights emerged as a pressing issue in the former East Bloc. Germany tried major offenders and opened the records of the East German secret police (the Stasi) to the public, and by 1996 more than a million former residents had asked to see their files.3 Other countries designed various means to deal with former Communist elites who might have committed crimes, with right-wing leaders generally taking a more punitive stand. The search for fair solutions proceeded slowly and with much controversy, a reminder of the troubling legacies of communism and the Cold War.