How 1989 Reshaped Europe

The economic turmoil following the revolutions in Central and Eastern Europe laid the groundwork for today’s perceptions of democracy and capitalism.

A scene of daily life in Poland in January 1990.

NOW 30 YEARS REMOVED from 1989's "annus mirabilis" – Central and Eastern Europe's year of miracles, when communist regimes seemingly toppled like dominoes – it's easy to focus on the Western perspective: the end of the Iron Curtain.

Images of the Berlin Wall's collapse on Nov. 9, 1989, and of thousands of pro-democracy protesters clogging the streets of cities such as Warsaw, Prague and Budapest that year have long been revered in the West as symbols of communism's demise in the region.

Often overlooked by those who didn't live through it, though, is the economic turmoil that accompanied the revolutions – and the winding political and social roads that many Eastern Bloc countries traveled in their pursuit of democratic and economic stability.

"I think 1989 is celebrated more in the West than in the East because of this ambiguity. What are we celebrating?" says Theodora Dragostinova, a history professor at Ohio State University who specializes in the politics and nation-building of Eastern Europe.

But the year 1989 and the decade that followed, an era of painful economic transition, resonate today in a region where people interpret that era in different ways, shading their views of today's politics and the world.

Among the region's older generations, memories of the 1990s' growing pains linger, coloring not only their memories of post-communist transition but also their views of Western institutions such as the International Monetary Fund, which ostensibly tried to facilitate the Eastern Bloc's transition but instead left many Eastern Europeans feeling like they were unable to dictate the terms of their own sovereignty.

"There was a stark division (in the 1990s). The people generally believed democracy was a good idea. But the free market, not so much, because these were the most painful years," Dragostinova says. "How do you privatize in a country where everyone's supposed to be equal?"

'Shock Therapy' Reforms Hit the Region Hard

Economies throughout the region plunged into recession in the 1990s. Efforts to privatize and open up markets caused unemployment to spike and inequality to flourish. Idealized visions of capitalism quickly gave way to the sheer upheaval involved in simultaneously transitioning so much of the region away from Soviet-inspired communist regimes.

"A complete ideological, political, economic and social system passed away, and some 400 million people had to choose a new system at the same time as the existing system of international and European order had to be reshaped," Carl Bildt, Sweden's prime minister from 1991 to 1994 and its foreign minister from 2006 to 2014, said during a 2007 speech recounting the revolutions of 1989, praising the region's economic durability following the 1990s but acknowledging the "initial chaos of collapse" that much of the Eastern Bloc endured.

In Poland, where initial austerity measures were arguably the most severe as the country plunged headlong into "shock therapy" reform, gross domestic product on a constant U.S. dollar basis contracted more than 7% in 1991 and barely budged in 1992 and 1993, according to data from the World Bank. It wasn't until 1994 that the size of Poland's economy returned to where it sat in 1990, the year the communist Polish United Workers' Party collapsed.

People line up to buy oranges in Krakow, Poland in January 1990.(ALEXIS DUCLOS/GAMMA-RAPHO/GETTY IMAGES)

Bulgaria's economy contracted each year from 1989 through 1993, whileRomania's GDP dropped nearly 13% in 1991 and nearly 9% in 1992. Similar economic hardship plagued Hungary and the former Czechoslovakia, which on Jan. 1, 1993, separated into two countries - the Czech and Slovak republics.

"Every one of these countries is richer today than it was under communism. And the ones that took the market economy path have remained relatively egalitarian," says Michael Bernhard, the Raymond and Miriam Ehrlich Chair in Political Science at the University of Florida and editor-in-chief of the Perspectives on Politics academic journal. "They haven't had burgeoning, huge inequality – that's actually the ones that went more kleptocratic. The Central Asian countries and Ukraine and Russia, and China for that matter, are much more inegalitarian than Poland or Hungary or Bulgaria or Romania or the Baltic countries."

But the shift away from communism didn't happen overnight. The public had for years been souring on the status quo under communism. Eastern European economies remained largely stagnant in the decades leading up to 1989. Supplies were often scarce, as markets, restaurants and shops in certain regions struggled to maintain and restock inventories. Even Soviet leader Mikhail Gorbachev in the 1980s recognized the need for some sort of economic reform in the communist capital of the world, pushing "glasnost" and "perestroika" – transparency and restructuring – policies for the Soviet Union and its Eastern European allies.

"The truth is there were constantly attempts to actually introduce economic reforms. And many of the economies were already characterized as mixed economies. They already had some market elements," Dragostinova says. "But now, you have the shock therapies which were introduced from outside."

Uneven Transitions Affect Today's Perceptions of the Past

Dragostinova says the economic transition was "mishandled in most cases" in part because Western institutions such as the IMF and the World Bank dictated many terms of economic transition in Eastern Europe.

"The interpretation was that the West won the Cold War, and they are setting the parameters," she says, noting that "resentment with the West" emerged as a byproduct that remains in some Eastern European circles to this day.

Importantly, the revolutions played out differently in each country, so it's difficult to cast a wide net over Eastern Europe's transition. Poland and the Czech Republic have largely emerged as economic success stories, and Poland's economy hasn't contracted on a year-over-year basis since the early 1990s.

Perhaps unsurprisingly, 85% of Polish respondents to a recent Pew Research Center poll approve of their country's shift to a market economy. A similar percentage supports the adoption of a multiparty political system. In the Czech Republic, 76% support the country's market economy and 82% back its multiparty system

But in Bulgaria – where consistent economic growth has been much harder to come by, as the economy foundered in recessions throughout much of the 1990s, sank again in 2009 and barely registered growth in 2012 and 2013 – only 55% of respondents approved of the country's adoption of a market economy.

Only 32% of Bulgarian respondents said the changes that have taken place since 1989 and the early 1990s have had a good influence on their standard of living. More than 80% of Polish respondents and 78% of Czechs said the same.

Today, Optimism on the Rise Across the Region

Worth noting, however, is that many Central and Eastern European governments have increasingly adopted more populist and nationalist ideologies in recent years – particularly in the aftermath of the global financial crisis.

Certain sects of populist politicians in Poland and Hungary, for example, "attacked 1989 as it transpired in their countries as hijacked revolutions" following the financial crisis, Bernhard says. They described "revolutions that were stolen" by the West and "they used that narrative to explain why people weren't happy," he says.

This has led to a bifurcation in how the revolutions of 1989 are remembered in Eastern Europe. On the one hand, Bernhard notes that populist politicians have attempted to use it as a scapegoat for economic and societal struggles. On the other, recent protests against more populist and authoritarian policies in Poland, Hungary, Romania, Serbia, Slovakia and the Czech Republic have drawn thousands of citizens into "defending the gains of 1989 against populist backlash," Bernhard says.

Dragostinova, meanwhile, says she is encouraged by the degree of public support for democracy and market economies profiled in the Pew survey. She notes the sheer number of individuals who say they embrace open markets after so many years of economic uncertainty, political upheaval and slow progress.

"The overwhelming majority of these countries seem to have an optimistic outlook. That was not the case of the 1990s," she says. "I'm even wondering whether we will continue celebrating 1989 going forward. I'm not sure it's even going to be celebrated much in the region (this year)."

Part of the reason for Eastern European optimism, she says, is the fact that an entire generation has now grown up without any meaningful memories of life under communism or the economically painful years that followed.

Support for democracy and market economies may be on the rise, she says, because for a growing number of Eastern Europeans, it's all they've ever known.