What's New About the New Europe? The Economy
When Defense Secretary Donald H. Rumsfeld sought to draw a distinction recently between the "Old Europe" represented by France and Germany and the "New Europe" of the fledgling democracies in the east, he stirred up a hornet's nest of criticism among Europeans who believed he was trying to divide the continent into skeptics and supporters of American policy toward Iraq and the Middle East.</br></br>Rumsfeld's observation was the right answer, but to the wrong question. There is no simple dichotomy in Europe as to who supports military action against Baghdad. Just as in the United States, you can find liberals in every corner of Europe who want to see Saddam Hussein overthrown, by force if necessary, and conservatives who think a U.S.-led military campaign would be disastrous for Western interests.</br></br>Where Rumsfeld's comments struck closer to the mark was in the implied notion that Europe's center of gravity is shifting east. In the postmodern European order, where war is now largely unthinkable, power is no longer measured by military arsenals but by economic vigor. Next year, when the European Union embraces 10 new members, the 25-nation group will include 450 million relatively prosperous citizens and account for more than one-fifth of global economic activity. But as the EU expands toward Russia's doorstep and consolidates its economic power, the locus of Europe's future economic dynamism will lie with the former communist societies of Central and Eastern Europe.</br></br>Over the next decade, Europe's fastest growth rate and biggest income surge are projected to occur in the eastern swath, stretching from the Baltic states to Bulgaria. American and European companies are beginning to pour investments into the region, seeking to capitalize on the desires of youthful populations eager to raise their living standards to match those in the West and to take advantage of labor costs that are one-fifth those in Germany. Jeffrey Immelt, chief executive officer of General Electric, says the new eastern states entering the EU will be a key corporate target over the next five years and could prove, in the short term, to be a more lucrative market than China.</br></br>The attraction of "New Europe" is not hard to understand. Deprived of material comforts during four decades of communism, tens of millions of Central and Eastern Europeans are determined to make up for lost time by acquiring the emblems of prosperity -- fast cars, stylish furniture, chic clothes and second homes -- that their cousins in the West have long taken for granted. The consumer frenzy gathering momentum in the east has not been witnessed on the continent since the go-go '50s, when Germany's postwar economic miracle bolstered the rest of Western Europe.