Colloquium 1996

Preface Reiner Weichhardt Deputy Director NATO Economics Directorate

While purely economic factors play a critical role in ongoing reforms within Cooperation Partner countries, success appears to be fleeting unless there is strong, widespread support from the population. In this, the Silver Anniversary Economics Colloquium, our focus was on the primary factors which influence attitudes towards reforms and introduction of market economies. Numerous objective elements - e.g. employment levels, wage rates (and degree of payment), health care, education, housing - were reviewed on both a general and country-by-country basis. And, finally, an attempt was made to evaluate intangible factors of the "social and human dimension" - public morale, entrepreneurship, feelings of individual and national security, and relative views of the future. Chaired by Daniel George, Director of NATO's Economics Directorate, the Colloquium opened with the Keynote Speech by Dr. Lajos Héthy, Political Secretary of State in Hungary's Ministry of Labour. Dr. Héthy's remarks pinpointed the vital role which workers play in all economic developments and how essential their support (and that of their families) is to economic reform. Following the usual practice, Panel I introduced the topic with an overview of broad macroeconomic developments and conditions among Cooperation Partner countries. While some speakers chose to give broad theoretical aspects covering the general area, specific details on Russia, Lithuania and Central Asia were described and compared in (other) papers. From panel members' remarks and ensuing discussions, it was clear that no single model, or set of key elements, can be applied to all countries for success of reform. Turning to the essence of this year's Colloquium, Panel II examined several critical factors in determining the degree of popular support for economic reform. Without exception, the introduction of market economies (or attempt thereof) in Cooperation Partner countries has brought some degree of pain and privation to the general populace. Following a broad outline of relevant factors at work in all countries (e.g. living standards, wage levels, health care, housing, unemployment), the focus was placed on Albania and Russia, two interesting cases in terms of size and relative development of economies. Subsequent presentations on international assistance and cooperation and the role of migration stressed the great interest of the world community in stable, positive developments in all Cooperation Partner countries. Speakers on Panel III narrowed the focus to one segment of the economy and population, albeit a most important: the armed forces and defence industry. In those countries which had built up large military forces and supporting industries, the post-Cold War downsizing has created severe stresses. No other significant sector has been faced with the job losses, wage reductions and arrears, reduction or loss of social welfare benefits, and other traumatic changes in life styles experienced by military personnel and defence workers. Defence conversion has been tried in all countries but has offered only minimal help. Finally, speakers on Panel IV turned their focus away from past and present and ventured into the always perilous topic of future developments. However, by including several potential scenarios in their approach, they reduced the risk considerably of complete inaccuracy. Clearly, all Cooperation Partner countries must develop better market-oriented education, training and business priorities for the success of reform, as the introductory speaker stressed. Specific scenarios for Russia, Ukraine, and Romania identified several key elements which will influence future trends. Two presentations by speakers from international financial organizations focused on factors considered important for developing their cooperation programs for future years. Such a diverse conference cannot be easily covered in an hour's summing up. But certainly our rapporteur touched on all the vital points raised by other speakers. Expressing strong support for NACC activities in general, he underlined the importance of the economic dimension. All Colloquium papers are included in this collection (three speakers chose not to submit papers, as noted on panel title pages). In general the papers reflect information current as of the conference date, although several authors have added developing information during the editing process. I wish to express appreciation to Mr. Felix Dorough and Ms. Elizabeth Dorough for editorial support and coordination in preparation of this volume. I also wish to thank Ulrich Gerza for once again (as in 1995) producing the summary of Colloquium discussions. Brussels December 1996