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East Europe : political giant vs. e conomic lagging

East Europe : political giant vs. e conomic lagging. dr. Jeney László Senior lecturer jeney@elte.hu. Economic Geography I. International Business bachelor study programme (BA) Spring term 201 5 /201 6 . CUB Centre of Economic Geography and Futures Studies.

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East Europe : political giant vs. e conomic lagging

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  1. East Europe: politicalgiant vs. economiclagging dr. Jeney László Senior lecturer jeney@elte.hu Economic Geography I. International Business bachelor study programme (BA) Spring term 2015/2016. CUB Centre of Economic Geography and Futures Studies

  2. Delimitation and main features of East Europe

  3. East Europe: physical geographical aspect • East European Plain • 4.5 mn km2 • European part of former SU (except: Karelia, Western peripheries North and Central Europe) • Highest point: Podolia 515 m • West: no natural frontier state borders

  4. East Europe: military aspect East Europe East Europe NATO NATO East Europe During Iron Curtain After Iron Curtain United Nations • Rounds: • Only Russia (political Core) • East Slavic countries: RU+BY+UA • Former SU (EastSlavic+ Baltic states+MD) • Former SU+EastCentral Europe (V4) • +DDR • Post-socialist countries: Balkan Peninsulatoo

  5. Religious feature: Eastern Christianity • Area of Eastern Christianity (orthodoxy) • Centre: from Constantinople (Byzantium) to Moscow • But: • East Balkan Peninsula too • Atheism • Religious minorities East Europe

  6. Home of Eastern Slavs Slavic countries Eastern (RU, UA, BY) Western (PL, CZ, SK) Southern (former YU, BG) Eastern Slavs: offshoots of the Broader Rus’ East Slavic Countries European Russia (except: Karelia, Kaliningrad) Belarus (except: Western part) Ukraine (except: Transkarpathia, Galicia, Podolia) East Europe • 6 • 6 • 6

  7. The Russian core area of East Europe

  8. Historical development Russian Empire (incl.: Belarus, Ukraine, East Poland too) After WWI: Ukraine + Russia (incl. Belarus) 1922: Soviet Union (Russia, Belarus, Ukraine) From 1991: independent states Russia, Ukraine and Belarus South Caucasus: Georgia, Armenia and Azerbaijan Independent Russia remained considerable power Russian presidents Boris Yeltsin (1991–2000) Vladimir Putin (2000–2008) Dmitry Medvedev (2008–2012) Vladimir Putin (from 2012)

  9. Transition to capitalism: economies shrank Inefficient, uncompetitive factories Most industries downsized dramatically  shutting down 1998 global financial crisis Depreciated the Russian ruble Further lowered living standards 1990s: economichardship

  10. 2000s: economies began growing again Average 6–8 % GDP growth Russia GDP: WR10. Bureaucratic reforms Soaring global prices for oil and natural gas However: dependence on oil and gas (80% of exports, 32% of GDP in 2007  13% in 1999)

  11. Foreign direct investments 1990s: inflow was prevented Corruption Poor infrastructure Unwieldy bureaucracy RU 1991–2001 FDI: 18,2 bn $ (China: 46 bn $) Per capita FDI: 15 $ (1149 USA, 224 Hungary) After mid 2000s: FDI in Russia expanded rapidly 2008: 70 bn Investors: CY, NL, L, UK Sectors Mainly oil, natural gas, metal ores Also automotive industry (VW Kaluga, Ford and Japanese companies)  2006: first time  foreign cars outsold domestic cars

  12. Ethnic based conflicts and their geoeconomic impacts

  13. Russia: mixture of political units 52 % of the minorities: autonomous territorial units: 15 national autonomous republics 2 autonomous districts (okrug) Homelands in European Russia North Europe, Urals and Middle Volga: relative higher share of Russians North Caucasus: Russian minority 90 numerically significant recognized nationalities 55 nationalities without republic status (homeland)

  14. Official constitutional position of republics 1990s: the Kremlin gave up much of its power Also other official language besides Russian 1350 newspapers, 300 TV and 250 radio channels in 50 minority languages and also in the federal TV and radio broadcasting 75 minority languages taught in 10 thousand schools Minority organisations (2000) 2000s: the Kremlin took it back European Council: discrimination in legislation Public actions are hampered Lots of minorities are out of minority education Lack of minority teachers, books Maintenance of minority culture is insufficient

  15. Area of Russian influences Periods of Russification Early 1800s Soviet times Permanent movements within the SU Out-migration of Russians to Belarus and Ukraine till 1989  to industrial concentrations Share of ethnic Russians Belarus: 13% (63% speaks regularly Russian) Ukraine: 22%  Crimean Peninsula, industrial areas of Eastern Ukraine, cities Russia: 82% (re-migration)

  16. Ethnic based tensions in the successor states North Caucasus: remained part of Russia resistance against Russian rule 1991: Chechnya also attempted its independence  2 bloody wars in Russia (1994–1996 and after 1999  more 100 thousand victims) Ukraine:Crimean Peninsula and East Ukraine (Russians) Crimean Peninsula and East Ukraine (Russians) Moldova: Transdnistria (Russians) Georgia:conflict with Russia Abkhazia (Abkhasians): occupied by Russia (hard entrance from Georgia) South Ossetia (Ossetians) Closed Georgian–Russian border Good relationship to the West (EU and NATO) Armenia: conflict with Turkey and Azerbaijan Armenian genocide by Turkey (not declared by Turk.) Lost territories (Mt. Ararat) in Turkey Karabakh question: Nagorno-Karabakh (Armenians) in Azerbaijan Closed Arm–Turk and Arm–Azeri borders Good relationship with Russia

  17. East European countries outside Russia

  18. State of economic development of Ukraine among the post-Soviet countries • 18 • 18 • 18

  19. Strong economic ties to Russia Ukraine, Belarus, Georgia and Armenia SU times: countries were tied closely together After transition: prefer greater independence Old connections hard to break Eastern UA: most important iron and steelmaking region  industries depend on: import oil and natural gas (mainly from Russia)  85% energy needs BY: heavy industry  50% of trade with Russia New connections difficult to form SU: developed heavy industry  equipment was not kept up to date

  20. Main supplier of food Till 1970’s: belonged to the growth poles of the SU Main supplier of food and heavy industrial centre Share in the SU: 18,5% of population, 26% of coal production, 36% of iron industry Heavy industry: 80% of industrial employment, 90% of investments, 70% of production Conservation of bad economic structure after transition Role of heavy industry, agriculture remained Critical dependency of oil and natural gas supply (from Russia, Kazakhstan and Turkmenistan) Soviet connections are hard to break, out-of-date firms are not competitive Economic lagging Per capita GDP, 1990: 4700$ (94% of the SU average of the former SU)  mid-position in the rank Living conditions (living area, salaries of employees, savings): also under the post-Soviet average • 20 • 20 • 20

  21. Ukrainian Employment Ukrainian employment Manpower: 22.3 mn But: unemployment rate: 7-8% Rate of skilled workers: 50% But: lack of management Sectoral composition: Employment: A: 25%, I: 20%, S: 55% GDP: A: 17% I: 43% S: 40% But: rising global prices for steel 2005: important changes • 21 • 21 • 21

  22. Economic Geography of Ukraine • Regional differences • East: Russian minority, heavy industry  more developed • West: Ukrainian majority, Hungarian, Polish, Romanian minority Regional development inequalities 2010 • 22 • 22 • 22

  23. Better state of Belorussian economy Russian: main trading partner 1991: Russian – Belarusian Federation Cheap Russian oil and natural gas  vulnerable

  24. Southern Caucasus (Transcaucasus) Georgia, Armenia Mountainous (peaks above 5000m) Georgia: East Orthodoxy, Armenia: autocephaly Christianity Azerbaijan More flat (Caspian Sea coast: areas below sea level) Muslim stronger linkages towards Asia Historical states BC 100: historic Armenia:also East part of contemporary Turkey (mount Ararat) From the AD 1000 to 1200: Georgia Turkish occupancy Russian rulers till 1991 • 24 • 24 • 24

  25. Economy of Southern Caucasus In SU times (till 1991) Georgia: 90% of SU’s tea and citrus fruits Armenia: fruits (mainly grapes) 2000s: steadily improved Economies suffered greatly from the ethnic conflicts Increasing industrial and service sectors Black Sea:SE part of ex-’Soviet Riviera’ (Batumi, Suchumi) Developing trading relationship with US, EU and Iran Georgia: reduction dependency on Russia • 25 • 25 • 25

  26. Ethnic conflicts in Caucasus Region Economic and cultural similarities: mountaineer identity Ethnically and linguistically one of the most complex area of the World: Christians and Muslims Russian control from mid 1800s Soviets divided minorities Karbardians (have more in common with Cherkessians), but grouped together with Balkars Division of Ossethians Armenians in Azerbaijan (Nagorno-Karabakh)  War between 2 member states (Armenia and Azerbaijan) during the SU regime Azeri Exclave: Nakhichevan

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