Transforming Economies: Eastern and Central Europe 25 Years After the Berlin Wall
Under the framework of its Legacy of ‘89 series, the German Marshal Fund of the United States hosted David Lipton, First Deputy Managing Director of the International Monetary Fund, in its Washington, DC headquarters on Tuesday, June 9 for a discussion entitled “Transforming Economies: Eastern and Central Europe 25 Years after the Berlin Wall.” The discussion was moderated by GMF President Karen Donfried.
Donfried began the discussion by noting that there was “no off-the-shelf blueprint for economic reform” of the communist systems following the political changes of 1989. She praised the work of leaders like Lipton for their contributions in guiding and directing positive economic reform. Lipton began by challenging the idea that types of transitions witnessed in nations like Poland were inevitable, emphasizing the momentous challenges faced by governments in Central and Eastern Europe. He laid out the framework of conditions that drove reform in 1989: first, there was a need for reformers with the right ideas and will to implement changes, secondly an appropriate policy, thirdly the allure of Western Europe and economic success, and finally external support in the commitment of the international community to assist nations through their reform process. Lipton also acknowledged while many countries in the region have experienced significant positive outcomes as a result of their commitment to reforms, other nations have lagged behind. One such example of this is Ukraine. Lipton addressed many of the trials facing Ukraine today, stressing the importance of resolving the conflict in the Donbass, which has severely exacerbated Ukraine’s economic crisis. Lipton praised the economic initiatives of the Ukrainian government, stating that the current government is “fully committed to the challenges of reform.” He stressed the importance of maintaining hope in the face of severe difficulty.
After Lipton’s initial remarks, Donfried posed a number of questions for the deputy managing director at the IMF. One question centered on role of Western allure in Ukraine’s implementation of reform and whether Euro-Atlantic integration for Ukraine was possible. Lipton noted “one thing Ukraine cannot change is its geography.” Lipton stated that Russia, as a member of the IMF, has an “obligation to be constructive, to be helpful” in the Fund’s mission to help the Ukrainian economy.
A final question of the discussion asked what more should the EU and United do in assisting Ukraine. Specifically, Donfried asked if a second “Marshall Plan” was needed. Lipton characterized the IMF’s $17.5 billion extended fund facility as a Marshall Plan of sorts, noting that as a percentage of Ukrainian GDP the funding was more generous than Marshall Plan aid, and stating that he hopes the Fund is effective but recognizes that additional resources would be helpful.
GMF’s Legacy of ’89 series marks 25 years since the fall of the Berlin Wall, the subsequent unification of Germany, and political transformations across Europe. Examining the cultural, political, social, and economic aspects of these watershed moments of the 20th century, The Legacy of ’89 brings together intellectuals, former and current government officials, and members of the media for reflection, stocktaking, and innovative policy prescriptive conversations amongst the transatlantic and pan-European communities.