The proceedings were opened with a panel discussion on Europe’s integration in the light of the war in Ukraine.

Leonore Gewessler, Austria’s Federal Minister for Climate Action, Environment, Energy, Mobility, Innovation and Technology, delivered introductory remarks on the need to end our dependence on fossil energy, as highlighted by Russia’s aggression against Ukraine.

This was followed by a keynote address from Danuta Hübner, Member of the European Parliament and former EU Commissioner for Regional Policy, which served as opener for the panel discussion by Ms Hübner, Birgit Niessner (Director of the Economic Analysis and Research Department, Oesterreichische Nationalbank), Velina Tchakarova (Director of the Austrian Institute for European and Security Policy – AIES, Vienna) and Guntram Wolff (Director of Bruegel, Brussels), moderated by Richard Grieveson, Deputy Director of wiiw.

The panellists challenged perceptions of the conflict between Russia and Ukraine while specifically focusing on the role of the EU not only in intervening, but also in facing the economic and political consequences of involvement. The debate began by pointing out the similarities and differences between the Cold War and the current conflict between Russia and the West. The panellists emphasised how, apart from Russia’s fundamental goal of Ukrainian subjugation, other world powers – namely China, the United States and the European Union – play an important role in the war’s geopolitical context. In this regard, the conversation also focused on Russia’s prominent role in the energy sector and on the sanctions regime imposed by the EU and the US, which, some argued, was ‘not impressive enough to have a meaningful impact’, given that Russian fossil fuel imports continue – and at higher prices than before the war. Although the methods of doing so were contestable, the panel also agreed that decarbonisation efforts were a strong option in efforts to lessen dependence on Russian imports. Overall, the panellists favoured EU aid – economic, financial and military – to ensure that Ukraine does not lose the war and is able to rebuild once it is over.

The panellists also proposed various measures to increase pressure on the Kremlin. One suggestion put forward by Guntram Wolff was to impose a tariff on Russian oil and gas, which, he predicted, would ‘reduce Russia’s profits and likely pacify global energy markets’. Several panellists also suggested that offering Ukraine EU membership would send a political message that the country is ‘part of the European family’. This became a particularly relevant point when discussing prospects for European enlargement, which, the panel found, was an important step towards securing democratic spaces in a defensive step against the possibility that the war starts to mirror a fight between autocracy and democracy. The panel also agreed that European action in the Western Balkans was another pressing issue.

The war’s economic impact and Ukrainian refugees’ integration into EU labour markets

Between the first and the second panel, wiiw economists Artem Kochnev and Maryna Tverdostup presented selected contemporary research carried out at the institute.

Artem Kochnev, expert on Russia and Ukraine and specialist in conflict economics, focused on the economic effects of the war in Ukraine and the sanctions against Russia. By using satellite data on the nighttime luminosity of war-torn regions, he depicted the war’s impact on economic output in Ukraine and tried to gauge the destruction of the country’s infrastructure. According to Kochnev, the decline in luminosity – and, thus, economic activity – in eastern Ukraine is comparable to that of the Donbass region in the 2014-2015 period. Concerning infrastructure, he argued that supply networks are ‘nested’, meaning that even the largest networks depend on critical nodes and are vulnerable to cascading failures.

Maryna Tverdostup, country expert on Estonia and specialist on labour markets, analysed the opportunities and challenges of the integration of Ukrainian refugees into EU labour markets. Ukrainian women coming to the EU very often have high levels of qualification, especially in the natural sciences and technical professions. Their potential to alleviate the omnipresent shortage of skilled workers in these areas is therefore considerable. According to Tverdostup, the main challenges to such efforts would be acquiring language skills, the recognition of educational credentials, and especially childcare.

The second panel in the afternoon discussed public debt in Europe.

As an introduction, the Austrian Federal Minister of Finance, Magnus Brunner, gave a video presentation in which he described the current challenges, underlined the importance of wiiw’s expertise on Central, East and Southeast Europe for Austria, and congratulated wiiw on its 50th anniversary.

Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley, delivered a fascinating online keynote speech on the history of public debt and its importance for the development of financial markets.

This was followed by a panel discussion with Barry Eichengreen, Daniel Gros (Distinguished Fellow, Centre for European Policy Studies, Brussels), Daniela Gabor (Professor of Economics, University of the West of England, Bristol), Margit Schratzenstaller-Altzinger (Senior Economist, Austrian Institute of Economic Research – WIFO, Vienna) and Harald Waiglein (Director General for Economic Policy, Austrian Ministry of Finance). It was moderated by Claire Jones from the Financial Times.

The panellists’ perspectives mirrored the contemporary debate regarding growing public debt amid increasing demand for public investment. While most panellists agreed that financing major public works (e.g. infrastructure projects) through sovereign debt has previously led to positive growth and development, opinions differed on whether this is true for European countries in 2022.

One viewpoint, represented by panellists who prioritised debt sustainability, found that, given the still strong economic growth after COVID-19 and other macroeconomic calculations, the status quo presents a ‘now or never’ opportunity for fiscal consolidation. Daniel Gros pointed out that: ‘We’ve never been too early in consolidating; we’ve always waited too long.’

Another viewpoint focused on the need to resolve pressing economic, social and environmental problems through public investment. In this respect, the decarbonisation of the economy, transforming the energy system to end dependence on fossil energy, but also budgetary support for poorer households against the impact of high inflation and the costs of the COVID-19 pandemic were mentioned most prominently. Daniela Gabor explained that ‘trying to push fiscal austerity when we need massive investments to solve these issues’ was the wrong way to go about stimulating positive change.

Harald Waiglein took a rather different view. In his opinion, sovereign debt is still a problem, because even if some economists think it isn’t there anymore, markets still do. He expressed his belief that this is why yields for heavily indebted countries are pushed up if markets come to the conclusion that they are pursuing financially unsustainable policies. Waiglein also believes that the European Central Bank would immediately end its unconventional monetary measures if they did not significantly reduce the yields of the government bonds of heavily indebted countries in Europe. He strongly argued in favour of the Stability and Growth Pact as a necessary measure against moral hazard in incurring sovereign debt.

Looking to the future, the debate focused on the ongoing green transition. The discussion centred on the productivity of green investment, with some panellists finding that investment in sustainable technology mainly ‘replaces existing capital stock without raising productive capacity’, therefore increasing costs without increasing output. Other panellists argued that the costs of climate action – as outlined, for example, in the EU’s Green New Deal – would be only a fraction of what we would face in the future if we failed to act on climate change.

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Presentation Barry Eichengreen

Presentation Artem Kochnev

Presentation Maryna Tverdostup

In session 1, which was chaired by political scientist Dorothee Bohle (University of Vienna), historian Jeremy Adelman (Princeton University) put the current turning point in our history, or ‘Zeitenwende’, into historical perspective. In his opinion, neither the catastrophists nor the advocates of a revival of liberal internationalism (such as the administration of US President Joe Biden) are right. Rather, the future will be determined by ‘muddling through’ – on the one hand, being able to handle the most dramatic consequences of shocks, such as Russia’s invasion of Ukraine or the COVID-19 pandemic while, on the other hand, being unable to solve fundamental problems, such as climate change. For Adelman, this will open up a huge gulf between the Global North and the Global South.

Ivan Krastev, from the Institute for Human Sciences (IWM) and the Centre for Liberal Strategies, discussed the claim that globalisation is in a deep crisis because of COVID-19 and the war in Ukraine. If this is true, he argued, Europe will be the biggest winner because of its high degree of political and economic integration. Trends like on-shoring (i.e. moving production from faraway destinations, like Asia) or friend-shoring (i.e. moving production to countries that are reliable in times of geopolitical crisis) are very much in favour of Europe’s economic setup. He claimed that companies, capital and people usually don’t move far but instead prefer closer destinations, as the history of European economic integration has shown.

For Krastev, the war in Ukraine challenges four major assumptions of European integration. 1) When it comes to the belief that economic interdependence is a source of security, he said that the current ‘weaponisation’ of natural gas by Russia is a major source of insecurity. 2) In response to the theory that military power no longer matters, he said that Europe’s military weakness means that it can’t help Ukraine sufficiently and is politically marginalised in the conflict. 3) When it comes to companies, he noted that the economic logic has switched from efficiency to resilience; in other words, reliable production in close geographical vicinity to the market is preferable to the cost-cutting, just-in-time manufacture of goods. 4) He also argued that the prevailing economic paradigm in the EU has also dramatically changed from fiscal and monetary austerity to ‘outspending the crisis’ – that is, countering the crisis with massive public spending in the hopes of minimising its effects.

Fiona Tregenna (Johannesburg University) painted a broad picture of the consequences of industrialisation in Africa. For a very long time, the continent failed to seriously industrialise. But although it has now gained speed and is driving regional economic integration throughout the continent, she believes that this is not the same as in Europe. On the contrary, industrialisation in Africa is far more ambitious and faster than in Europe, with tremendous consequences in many areas, such as value chains, trade, structural change, winners and losers in societies as well as among countries, digitalisation and climate change. As history has shown, industrialisation is about much more than economic growth – it’s a broader push for human development, which is also the case in Africa.

Ivano Cardinale (Goldsmiths, University of London) and Michael Landesmann (wiiw) used a theoretical framework that builds on the traditional understanding of the interplay between economic structures and political conflicts going back to François Quesnay and David Ricardo. The framework analysed the constraints that economic mechanisms impose on the trajectories of political-economic systems when they are subject to particular political processes and policy interventions. They used this framework to interpret the key challenges of European integration in the light of current developments within and outside Europe, including the pandemic, the war in Ukraine, the energy and inflation crises, and the trend towards global multipolarity.

István György Tóth (Tarki Social Research Institute) started his presentation with the premise that the long-term survival of the European integration project requires at least some degree of ‘similarisation’ of social structures, demographic patterns and shared values (social, economic and political) across the European community. He then proceeded to identify some key indicators for addressing social convergence and showed how the CEE (and the core) members of the EU have performed in the past 30 years. Questions were raised about the longstanding internal heterogeneity of the CEE region.

India: The making of a catastrophe: COVID-19 and the Indian economy

In session 2, chaired by Michael Landesmann, Jayati Ghosh (University of Massachusetts Amherst) showed how the COVID-19 pandemic has been the worst health calamity in India for at least a century. But beyond the direct health and mortality impacts, the economic and social devastation experienced by the country merits the description ‘catastrophe’. This cannot be ascribed to the disease alone, as much of the damage resulted from government action and inaction. Significant policy failures (in both macroeconomic and sectoral terms) were primarily responsible for the widespread and pronounced decline in people’s life expectancy and in indicators of well-being in addition to having set back India’s development project.

Turkey: Erdoğanism – a political economy in crisis – ‘I want to lead Turkey like a company’

Cengiz Günay (Austrian Institute for International Affairs – OIIP) showcased how Turkey’s political economy under Recep Tayyip Erdoğan has been characterised by the personalisation of power, neoliberal authoritarian governance, and the redistribution of resources through patronage networks. His presentation identified the core pillars of Erdoğanism, explained the domestic and international factors that have created its crisis, and tried to explore potential future developments.

Italy’s structural challenges and its social and political stability

Annamaria Simonazzi (University of Rome) focused on three themes: the management of public debt within the institutional rules of the EU and the changed context of monetary policy; the need for a European and national industrial policy aimed at restructuring and modernising the economy; and the question of work and social equity. The war in Ukraine has exacerbated the problems caused first by the 2008 financial crisis (and subsequent austerity) and then by the pandemic. Two related problems – public debt and economic restructuring – have been made more urgent by the energy crisis.

Poland’s politics and political economy under the PiS government in the new global context

Wojciech Przybylski (Res Publica Foundation) discussed the political economy of the PiS government, which is driven by several uncertainties that are typical for Central European countries. It is based on the conviction that the 1989-2015 economic growth model, driven by cheap labour spurring new investment, has ended and that the middle-income trap is looming. As Poland is preparing for a general election next year against the backdrop of Russia’s war on Ukraine, energy sector tensions, economic adjustments to the EU’s new Green Deal, the post-pandemic recovery and economic constraints are largely influencing the parameters of policy ambitions and political communication.

Bulgaria and Romania: Does growth bring about prosperity on the EU’s eastern periphery?

Rumen Dobrinsky (United Nations Economic Commission for Europe and wiiw) presented a comparative picture of some key aspects of the economic performance of the two countries over the past few decades and the factors that led to divergent outcomes. The catch-up process in per capita GDP did not always translate into rising prosperity and well-being for the population in either country, as economic growth was accompanied by rising income inequalities and widespread poverty. The presentation considered the causes of unequal income distribution in the EU’s eastern periphery and reviewed some negative implications of these developments.

The Western Balkans: Lost between Yugoslavia and the EU

Branimir Jovanović (wiiw) examined the political, economic and social developments over the past three decades in the five former Yugoslav republics that are still not members of the EU (Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia and Kosovo). The presentation started with how the break-up of Yugoslavia and the resulting wars and privatisations during the early 1990s gave rise to nationalism, corruption and inequality. Jovanović argued that the neoliberal policies of the following period – based on small government, deregulation and more privatisation – allowed the economic and political elite to expand its power. He discussed how the failure of the EU to quickly integrate the region has magnified the problems of corruption, inequality and nationalism before going on to look at how things might evolve in the future, depending on how the EU positions itself towards the region.

Day 1 ended, In which she argued that we live in a world where the new type of war, which follows an economic rather than a political logic, is neither ending nor spatially contained. In her opinion, we need to redefine the concept of military security, replacing the classic Clausewitz concept of ‘war as politics by other means to achieve geopolitical goals’ with a concept in which the defence of human lives and rights is the primary objective and guideline for using military force. According to Kaldor, influential circles in European NATO countries are increasingly adopting these ideas, although the US still follows the classical concept of NATO as an organisation to wage and win conventional wars. In her opinion, the best way to avoid the war in Ukraine would have been to reduce Europe’s dependence on Russian oil and gas a long time ago, because that would have undermined Putin’s regime economically. Kaldor is convinced that Putin’s threats regarding tactical nuclear weapons in Ukraine are credible and have to be taken seriously. As long as Putin is able to raise the stakes militarily and escalate the war further, Kaldor concluded that, as desirable as it would be, it is hard to imagine how Ukraine can win it.

Day 2 took place in the Auditorium of the Central European University and began with Session 3 on ‘Transborder Movements of Capital and Labour, Conflicts and Their Remedies’, chaired by Robert Stehrer, Scientific Director of wiiw.

‘The continued viability of CEE’s FDI-based growth model is increasingly being called into question amidst rising concerns of a possible middle-income trap.’

Economist Zuzana Zavarská from wiiw presented a paper titled ‘The Functional Division of Labour in EU Value Chains and Implications for CEE Economies in the New Normal’. She explained how the integration of Central Eastern Europe (CEE) into the EU in the early 2000s went hand in hand with a notable socioeconomic transformation of the region.

‘How a policy initially designed to empower regions became extremely pliable to the abuses of central governments.’

Vera Scepanovic (Leiden University) and Gergő Medve-Bálint (Centre for Social Sciences, Hungarian Academy of Sciences) were critical of the EU’s current cohesion policy. Their presentation discussed how a policy initially designed to empower regions has become extremely pliable to abuse by central governments.

‘Migrants and Labour Markets: Vicious or Virtuous Economics-Politics Cycles?’

Martin Kahanec (Central European University) examined the myth that migration increases competition in the labour market, depresses wages, or worsens the employment conditions of native workers. As evidence from numerous studies shows, the opposite is true. Nevertheless, these popular myths are used to influence political sentiment against immigrants.

‘After Ukraine: Wither European Energy Security?’

Andreas Goldthau (University of Erfurt) addressed the impact of the current energy crisis on European energy security. He argued that the state is again intervening in all areas of energy policy and that the principles of free, liberalised energy markets, which have served customers quite well over the past 20 years, no longer apply. In his opinion, the state will continue to play an important role in energy markets long after the war in Ukraine is over. Instead of markets, it will again be the state that will be in charge of energy.

‘The Global
Brokerage of Domestic Services and Social Inequalities: The Austrian and Sri Lankan Case Compared’

Brigitte Aulenbacher (Johannes Kepler University Linz) and Wasana Handapangoda (University of Sri Jayewardenepura) exposed the methods of placement agencies, which have led to the commercialisation of labour in homecare work. Combining a Polanyian, intersectional and a neo-institutionalist perspective, their presentation provided insights into the interrelation between the provisioning of domestic services and social inequalities. Comparing and contrasting the Austrian case of brokered live-in care and the Sri Lankan case of domestic work brokerage, they showed how the respective work and care arrangements interact.

‘Care and Empowerment Strategies among the Urban Poor’

Felipe Gonzalez Santos (Department of Sociology, City University of London) emphasised how social movements empower those who are threatened with eviction from their homes to take their struggle into their own hands and oppose the financial corporations that threaten their existence. He presented case studies of such movements in urban centres of Spain.

‘Democratic Illiberalism: Conceptual and Normative Issues’

In session 4, chaired by Jeremy Adelman, Ruzha Smilova (University of Sofia) discussed the theory and practice of illiberalism evolving into a composite ideology designed for our democratic age and how illiberalism is a serious threat to constitutional democracy today. After presenting the conceptual debates on ‘democratic illiberalism’, she addressed its dangers from a normative point of view.

‘National Passion and Economic Interest: The Moral Economy of the Hungarian Civic Right’

Béla Greskovits (Central European University) adopted a moral economy framework to better understand the formation of a vibrant right-wing sector of Hungarian civil society. He analysed the interaction between nationalist and economic interests that motivated the agency of two social groups: the Bildungsbürgertum (cultural bourgeoisie), who joined the movement driven by a socially conservative cultural agenda, and the propertied petite bourgeoisie (owners of small and medium-sized businesses), who were led by economic interests.

‘War on Gender: Weaponising Gender in the Service of Anti-liberal Rule’

Anti-liberal rulers in Central and Eastern Europe, while vehemently denying that ‘gender’ is a relevant social category, nevertheless actively utilise the concept to establish, legitimate and maintain their rule. In her presentation, Éva Fodor (Central European University) described the main dimensions of this emerging gender regime using primarily the example of Hungary, with comparative nods to Poland and beyond.

‘Who are the Populists’ People?’

Rainer Bauböck (European University Institute, Florence) explained in his presentation how authoritarian populist parties in Western European countries have mostly campaigned for restricting access to citizenship, while in Central and Eastern European states, they have often expanded access to citizenship and voting rights to ethnic diasporas and kin minorities.

The conference endedwith a panel featuring Hannes Swoboda, Mary Kaldor, Misha Glenny and Shalini Randeria (chair). Among other issues, they discussed the future of European energy supplies, migrant movements triggered by global warming, the impact of Brazil’s election, renewable energy and the rise of populism. The war in Ukraine was naturally another major issue of the discussion. Hannes Swoboda stressed the importance of achieving a cease-fire between Russia and Ukraine while at the same time stressing the need to provide economic and military aid to Ukraine. Mary Kaldor pointed out the need for humanitarian aid for the civilian population, especially during the upcoming winter. According to Misha Glenny, the West must prepare itself and develop a clear strategy for dealing with a post-Putin Russia – an idea that was widely shared by the panellists.

The first panel was composed of several experts in European economic relations: Debora Revoltella, director of the Economics Department at the European Investment Bank; Maria Demertzis, senior fellow at Bruegel in Brussels; Cengiz Günay, director of the Austrian Institute for International Economic Affairs; and Florian Bieber, professor of Southeast European History and Politics at the University of Graz. The panel was moderated by Michael Landesmann, senior research associate and former scientific director of wiiw. It used the Russo-Ukraine war to frame its discussion of the European Union’s intra- and interstate positioning and affairs. The panellists discussed issues that the EU will face in the future, including international competitiveness and the position of its economies in an increasingly competitive international environment, which is characterised more and more by protectionism and the rivalry between the US and China.

The international competitiveness of EU countries was severely damaged by the energy price shock triggered by the war in Ukraine. However, the European countries have adapted remarkably well to the new situation and have reduced gas imports from Russia much faster than expected while also imposing an embargo on Russian oil. The energy shock has helped speed up the green transition, with renewable energy gaining in importance. The panel then shifted to the topic of EU enlargement, especially with regard to Ukraine. The historical precedent of the Western Balkans contributes to the EU’s cautious attitude towards enlargement. In fact, despite far-reaching promises from the EU, only one state in the region has been admitted over the past decade (Croatia).

According to some participants in the discussion, Ukraine differs from other Eastern European states in that it is quite adamant about its desire to join. While the moral argument for admitting Ukraine to the EU is compelling, it is countered by political and economic considerations, as well as by enlargement fatigue in some key member states. On the question of the admission of Ukraine, some panellists suggested that the EU is largely just paying lip service to the idea – not unlike the situation with the Western Balkans, which over time have lost faith in the EU.

The panel closed with a discussion of Europe’s identity crisis and of its strategy regarding the war in Ukraine. The world’s governments are increasingly falling into disarray and becoming more authoritarian, and the EU has failed to come up with an effective foreign policy to respond to this. Within the EU itself, right-wing nationalism is becoming more pervasive – something that jeopardises European unity at a time when it is more important than ever before. Although the internal and external threats to liberalism in the EU will pose major challenges over the coming decades, they will also provide an opportunity for the EU to respond effectively and to emerge in a strong global position.

The reconstruction of Ukraine – presentations from wiiw and Bertelsmann Stiftung

Our seminar next welcomed several experts on the CESEE region, who presented research and forecasts on the reconstruction of Ukraine. They included Miriam Kosmehl, senior expert for Eastern Europe and EU Neighbourhood at the Bertelsmann Stiftung; Richard Grieveson, deputy director of wiiw; Olga Pindyuk, Ukraine country expert at wiiw; and Veronika Movchan, academic director of the Institute for Economic Research and Policy Consulting in Kyiv.

The presentations highlighted the changes in Ukraine’s recent past in order to frame the discussion about the future of Ukraine, the war and how it will affect Europe. For example, in the past 30 years, Ukraine has seen an inexorable rise in the number of its citizens who want a democratic, European society. Together, they form a community of people who demand that the government protect their civil rights, which boosts their sense of European identity. Panellists asserted that Ukraine is proving resilient in the face of Russian aggression in terms of both its spirit and its economy in general. Despite Ukraine’s progress on the battlefield, a military victory over Russia would not remove Moscow as a threat to the European project. Some panellists claimed that this geopolitical consideration creates a strong incentive for Ukraine to be granted EU membership, given its capable army, its military experience and its vast territory. However, even before it is admitted to the EU, Brussels should support Ukraine through various economic measures, such as providing it with complete access to European markets.

Keynote by Daria Kaleniuk – Reforming Ukraine during the war and after military victory

Daria Kaleniuk, executive director of the Anti-Corruption Action Center in Kyiv, delivered a passionate keynote address about the future of Ukraine after the war – which, Kaleniuk is convinced, will end in Ukrainian victory. She discussed the causes of Russia’s aggression, which began when Ukraine launched anti-corruption initiatives that threatened Russia’s ability to control the Ukrainian government. Despite Russia’s goal of weakening Ukraine’s sovereignty, the High Anti-Corruption Court is the only court to have remained functioning since April 2022; as she pointed out, its values constitute a big part of Ukrainian identity. Ukrainians, in Kaleniuk’s opinion, must therefore continue even during the war to address such internal problems as corruption in the government, so that when its military victory does come, the country is ready to adjust. An integral part of reform in post-war Ukraine will be Russia’s payment of reparations, which will enable Ukraine to rebuild itself. Furthermore, Ukraine envisages both global recognition of Russia’s wrongs and its own admission to the EU as it recovers from the war. Kaleniuk offered some compelling arguments for Ukraine’s admission, including its unique defence capabilities and its experience in tackling government corruption.

The second panel of the Spring Seminar 2023 was held in conjunction with the Financial Times and hosted several experts on inflation in the euro area. These included: Julia Wörz, head of the CESEE Analysis Unit at Österreichische Nationalbank; Helene Schuberth, chief economist at the Austrian Trade Union Federation; Sandra Švaljek, deputy governor of the Croatian National Bank; and Phillip Heimberger, an economist at wiiw who specialises in macroeconomic policy. It was chaired by Claire Jones, business editor of the Financial Times.

The panel first discussed the high inflation rates seen in Europe since mid-2021. Although inflation does seem to have peaked at the end of 2022, the panellists agreed that it is important to monitor further developments, especially energy prices. According to them, some policy measures have proved effective at stabilising energy prices (such as decoupling electricity and gas prices or introducing price controls). Some politicians and economists argue that this period of costly energy is only the beginning, since prices will continue to rise throughout the transition to clean energy. Regardless of the type of energy used, efficiency is one of the most important ways of minimising usage. For example, buildings alone represent about 40% of the EU’s energy usage, but energy-efficient buildings that utilise new technology would help reduce that dramatically.

Phillip Heimberger discussed the issue of energy prices rising across the board, especially when compared to the US. While some of the disparities between the US and the EU in terms of energy inflation can be attributed to the stronger labour market in the US, it is also worth pointing out that Europe imports most of its energy, whereas the US is an energy exporter. Targeting inflated energy prices with higher interest rates has proved difficult, Heimberger explained, because high interest rates drive down investment in renewable energy. In the long term, this is likely to affect price stability.

Although the EU is experiencing inflation in various goods and services, Croatia is a special case, having recently adopted the euro as its national currency. According to Sandra Švaljek, some companies attempted to take advantage of the switch from the kuna (the old currency) to the euro to raise prices disproportionately. The government responded by requiring shops to display their prices in both euros and kunas, so that shoppers could gauge the value of the new currency. This led to some prices in retail chains actually falling, as they became aligned with euro prices in other countries. Furthermore, Croatia used price controls for nine essential foodstuffs. For a consumer on an average income, these items account for about 4% of the food basket; for lower-income consumers, they make up about 10% of the food basket, a much greater share than for the middle class. This move helped poorer individuals adjust more easily to the euro, as they were better protected against food price inflation than people with higher incomes.

The third panel was a discussion in cooperation with the Central European University (CEU) in Vienna. It was moderated by Mario Holzner, executive director of wiiw. He welcomed three experts on the region: Cathrin Kahlweit, correspondent for Central and Eastern Europe of the German daily Süddeutsche Zeitung; Paul Lendvai, a Vienna-based journalist and author; and Caroline De Gruyter, Europe correspondent of the Dutch newspaper NRC Handelsblad.

The panellists discussed the past and the future of Central and Eastern Europe, where the Russian presence in Ukraine threatens other countries of the region. In particular, the discussion focused on the situation of Moldova, an immediate neighbour of Ukraine and a former Soviet republic that is engaged in a decades-old conflict with Russia over the breakaway region of Transnistria. The strong Russian influence in the country was massively reduced when reform-oriented, pro-Western political forces came to power a few years ago. Since Russia’s invasion of Ukraine, the country has lived in constant fear of becoming Putin’s next victim. Up until the start of the Ukraine war, the country was neglected by the EU, explained Cathrin Kahlweit and Mario Holzner, and the pro-Western reformers did not receive adequate support.

In general, the panel reflected the perspectives of CESEE member countries of the EU – especially the fact that they are often ignored and overshadowed by larger Western states, leading to tension between countries on both sides of the former Iron Curtain. Some panellists were optimistic that the war in Ukraine could lead to a situation in which Central and Eastern European states have a greater say in the EU. As far as support for Ukraine is concerned, this has already partly come about; one need only think of the leading role played by Poland and the Baltic states in this effort.

However, the panellists pointed out that many countries in the region are not wrong when they claim that the fact that Ukraine has not been admitted to the EU yet is proof that the EU hasn’t really changed its negligent attitude towards the CESEE region.