Slubice, Poland – Having spent my summer in Germany and having made excursions into both the Czech Republic and Poland while staying in East Germany, I gained an interesting perspective on the economic and cultural development of Eastern Europe. Economic expansion of the European Union (EU) into Eastern Europe is sure to be a mixed-bag. On the one hand, it may give many Eastern European countries the credibility to strengthen their respective economies and increase the international value of their currencies through the adoption of the Euro, the common currency of the EU. On the other hand, it may result in a potential devaluation of the Euro, as the entry of less economically developed countries such as the Czech Republic and Poland may dilute the average value of the Euro.
Though Eastern Europe is still developing economically, one finds a distinctly modern entrepreneurial spirit driving some of its local economies. A case in point is Slubice, a small village in Poland, not much more than three square blocks plus some houses, located directly across the Oder from Frankfurt, Germany. Because prices are cheaper in Poland than Germany, Slubice has created a niche market to sell discounted alcohol and tobacco to Germans. However, EU expansion will probably deprive Poland of this competitive economic benefit and thereby cause this niche market to fail.
It is also interesting to observe the popularity of English in Dresden, Chemnitz and other Eastern European cities (not so much Berlin). While many Western Europeans have been learning English as a second language for decades, Russian was the second language of choice in these former Soviet block cities. However, for the past 15 years both the study of English and its cultural influence have become more important. As a result, it is almost the norm to see a mix of English and German in the advertising one sees in the public venues of these cities. My personal favorite was the East German billboard that announced “Die Stadion -Hits in your Wohnzimmer.”
While Europe is becoming more culturally and economically integrated, there are also nationalistic tendencies that raise concerns. For the first time since reunification, Germany seemed to be united by patriotism, as the World Cup this summer led to an unprecedented number of German flags, jerseys and cries of “Deutschland!”
However, there also seems to be a deep-seated mistrust of nationalism among many Germans who connect chauvinism with the tragic history of Germany during the Second World War. In my conversations with Germans, especially the more elderly, it was clear that the outburst of nationalism this summer was somewhat spontaneous and difficult to justify. In fact, many Germans asked why they should be proud of their country. As a result, it is unlikely in my opinion that German nationalism will pose a threat to the expansion of the EU. By contrast the much written about nationalistic mentality that fueled the French student riots this summer seems to be more alarming.
The greatest cause of concern for a united European economy, assuming it remains strong and strengthens Eastern Europe, is that it will adopt the protectionist tactics of Korea and Japan. Nationalism, either for a single European nation or for all of Europe, can easily morph into protectionism, especially for an EU comprised of socialist France and so-called moderate governments that are to the left of America.
The possibility of a protectionist EU is troubling. Europe united under the EU might have the economic power to hinder free trade by adopting harmful tariffs and subsidies. If that were to happen, first-world competitors of the EU, most notably America, might retaliate with protectionist policies of their own. Hopefully such a trade war will not occur for two reasons. First, tariff battles are ultimately bad for markets and bad for consumers. Second, such a battle might seriously damage the emergence of major third-world competitors who have the potential to drive down costs and to provide competition to many major first-world corporations.
All in all this is an exciting time in Eastern Europe, one filled with potential promise and possible dangers for both the EU and the increasingly interdependent world economy of which it is an integral part.
