1 The IV. Annual Meeting of the Aid Practitioners’ Network for European Development Cooperation (London, May 2011) „How to work with and assist countries in transition” Lilla Makkay Head of Department for International Development Cooperation and Humanitarian Aid Ministry of Foreign Affairs, Hungary HUNGARY

2 Actuality of transition – MENA countries Possible relevance and applicability of the transition experiences of the Central and East European countries? European Transition Compendium – based on the transition experiences of the new EU Member States HUNGARY

3 „ Transitology” – systematic approaches In Europe: “building-block” approaches, combining political change with social justice and economic development Country circumstances are always different! No standard transition models, no „one size fits all” strategy HUNGARY

4 Transition in Central and Eastern Europe – specific case in terms of its causes (weakening and the collapse of the Soviet Union) and objectives (European and Transatlantic integration - “reintegration”) No similar examples from the past HUNGARY

5 Main transition patterns in Central and Eastern Europe: (re)establishment of multi-party system, democratic institutions free elections rapid marketization, economic reforms based on Washington consensus International financial and trade integration in some countries nation state building Foreign assistance focusing mainly on building of institutional capacities, strengthening of political parties, civil society HUNGARY

6 Main features of the Central and East European new EU Member States prior to their transition: common history of a 40-year communist rule imposed on previously independent states state-owned, command economy, limited private sector weak economic performance (middle-income status), high state indebtedness (in some countries) strong state, weak civil society one-party system (communist party), no legal opposition partial market reforms earlier with limited results HUNGARY

7 broad social security system, full employment high human development index low population growth gender equality secularized states different languages, but similar cultural traditions widespread public support for fundamental changes no religious, limited ethnic tensions Western cultural orientation HUNGARY

8 Transformation results – positive elements: Western style democracy with fundamental freedoms and fully functioning market economy political stability majority of new EU MSs have become high-income (OECD) countries main objectives - EU, NATO and international trade and financial integration – reached market openness accompanied by institutional strengthening, growing productivity and competitiveness high share of technology intensive industries HUNGARY

9 Transformation results – controversial elements: stabilization/economic transition was accompanied by a sharp initial decrease in output low number of strong and well capitalized local SMEs, consequently low capital export growing inequality and poverty the rapid privatization process led to high unemployment (EU average) in some countries, excessive privatization led to private monopolies and deficiencies in the public utility sector HUNGARY

10 Crucial role of the state and its institutional capacities in sustaining reform process Importance of understanding the underlying political, economic and social conditions, cultural, historical, institutional traditions Aid programs need to fit the local political landscape, allowing flexibility, without imposing ready made models HUNGARY

11 More than 20 years have gone since the onset of transition processes in Central and Eastern Europe Experiences, lessons learned are still applicable, in a selective way „A wise man learns by the mistakes of others, a fool by his own” HUNGARY

Thank you for your attention! Lilla Makkay HUNGARY