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. As noted earlier, 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. 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.

Other countries followed alternate paths. Czechoslovakia, Slovenia, and Estonia took more gradual approaches. 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. 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.

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 "The Collapse of Communism in the East Bloc" in 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, 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 page 961).

Romania and Bulgaria lagged behind in the postcommunist transition. Western traditions were much weaker there, and both countries were much 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. Germans coined the term Ostalgie — a combination of the German words for “East” and “nostalgia” — to label this fondness for the lifestyles and culture of the vanished East Bloc.

At the same time, many East Bloc citizens had never fully accepted communism, primarily because they equated it with Russian imperialism and the loss of national independence. The joyous crowds that toppled Communist regimes in 1989 believed that they were liberating the nation as well as the individual. Thus, when communism died, nationalism re-emerged as a dominant force.