LEVERAGING INSTITUTIONS.

by Ryan Avent

The crisis in the Caucasus has led to a great deal of discussion concerning the wisdom of bringing Georgia into NATO. These debates are almost uniformly focused on geopolitical, strategic issues, and that's unfortunate. Two of the big lessons of the post-Cold War period are that economic reform and geopolitical issues go hand in hand, and that international institutions can provide powerful leverage in generating economic and political reforms in former Soviet bloc nations.

A colleague of mine at The Economist's Free Exchange blog discusses new research comparing the recent economic performance of Georgia and Estonia. He recalls the scene in 1990s Warsaw:

I remember back in the early 1990s when the central European nations were so desperate to join the EU. On a 1995 World Bank mission to Warsaw, I was shocked by the stress that the Polish policymakers put on geostrategic considerations. To me EU membership was all about the economics; to them it was all about making sure that the iron curtain came down east of them the next time Russia started acting imperial.

The European Union was about political security for many central and eastern European leaders. All the same, it was an economic boon.

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