We demonstrated that the relatively fast convergence of CEE countries observed in the initial years of our sample period was interrupted by the global crisis in 2008. Since then, convergence has been slower. – Overall, we believe – and demonstrate – that the post-transition growth model has reached its limits and that further convergence of the CEE region to the more advanced EU economies cannot be achieved by simply replicating past efforts. Summarizing they write: “before the financial crisis the convergence of the CEE economies was mainly driven by strong capital inflow facilitated by market reforms implemented at the beginning of the 1990s and accession of CEE countries to the European Union. The results of our empirical analysis seem to confirm our intuition that this growth model has come to an end around the time of the global crisis. The CEE countries’ growth and convergence will now be driven mainly by factors affecting structural competitiveness, especially innovation activity, institutional environment and policies (or lack thereof) b. The Results of Shock Therapy One of the most important changes from communist rule was the introduction of private property, individual freedom, a new legal system, and an independent civil society that go with it. The first ideas for the transition to a market driven economy were pragmatic and show the attempt to change some of the obvious negative consequences of communism. Grigory Yavlinsky, the author of the 500 Days plan and shortly vice prime minister under Yeltsin, intervened with his team in the third largest city of Russia Nizhny Novgorod with an interesting program. The city gave ownership of apartments to the inhabitants. Up till that moment businesses and the houses were owned by the state or by a collective or cooperative. Condition for transferring ownership was that the new owners were also responsible for the energy costs of the apartment. This solved the problem that nobody felt responsible for the heating of the apartments. The heating was regulated centrally without charge. Nobody had a need for thermostats. You could not even turn of the heating. If it was too hot the inhabitants just opened their windows widely. This changed when the inhabitants had to pay for their own use of energy. It changed their behavior because they understood the relationship between ownership and costs. c. The Privatization of Economy In 1989 the vast majority of business and residential property was either directly owned by the party-state or held in some form of collective or cooperative ownership. What in hindsight went wrong is that the privatization was done quickly without a clear framework of law, regulated by an independent judiciary. As a result the old powerholders with good connections in the communist party were able to take advantage in buying the available assets. As a result a new class of very influential post- communist “oligarchs” developed. This lead to strong resentment and mistrust of the people who were not “connected” (Timothy Garton Ash, 2019). Thirty years after 1989, Central Europe is still influenced by the impact of this transformation. Some individuals have been successful in the new “market environment”, but many more are unemployed and angry. They see that often members of the former communist ruling class, have been doing so well because of the unfair beginnings of capitalism in the 1990s. The economic transition in the early nineties has been described as katastroika (combination of catastrophe and the term perestroika and as “the most cataclysmic peacetime economic collapse of an industrial country in history” Interestingly enough the transformation went partly wrong because of good intentions of the transformers. As an example the “voucher approach”. Transforming the economy the Government tried to avoid open sale of state-owned assets. They were afraid that it would result in concentration of ownership among the Russian Mafia and the nomenklatura. Instead the reformers decided to rely mostly on “free voucher privatization”. This type of privatization took place by giving citizens vouchers. Each voucher corresponded with a share in the national wealth. They were distributed equally among the population, including minors. They could be exchanged for shares in the enterprises to be privatized. Looking back one can see this project terribly failed. “Because most people were not well- informed about the nature of the program or were very poor, they were quick to sell their vouchers for money, unprepared or unwilling to invest. Most vouchers—and, hence, most shares—wound up being acquired by the management of the enterprises. Although Russia’s initial privatization legislation attracted widespread popular support given its promise to distribute the national wealth among the general public and ordinary employees of the privatized enterprises, eventually the public felt deceived. (Privatization in Russia) This all lead to a burning sense of injustice caused by so many collaborators of the old regime becoming economic winners. As a result of the social consequences. “liberal market economy” became for many a dirty word. d. The 2008 Global Financial Crisis. This mistrust in the concept of a free market economy became stronger after the worldwide financial crisis in 2008. Seeing the problems in the Western European countries in surviving the crisis many Eastern Europeans were losing their trust in liberal market economies and were looking for alternatives. Suddenly some Asian approaches like the one in China with state capitalism and illiberal economies were drawing attention. 2. The Erosion of Trust The political system under communism promoted and rewarded “reporting” (informing) on one another. This fact caused both a social disgust at “reporters” and a social “out of fear” pressure for reporting. (Timothy Garton Ash, 2019) The “reporting” was a powerful tool of oppression for the ruling class, as fear prevented open sharing of thoughts. Ideology often prevailed over blood ties. A friend of mine from the former GDR told me that after the fall of the Berlin wall citizens got the right to look into the files of Stasi /the secret police) to see who was informing on them. Up till this moment (2019) she did not dare to do so because of the fear of discovering that close friends and family members were involved. This had a consequence for all four culture clusters, but the strongest however for the Pyramid countries with their collectivist core. In principle, the rule in collectivist cultures is that in return for loyalty to your “in-group” the in-group will take care of you. In Pyramid cultures it is mostly clear what the shape of in-groups is. Almost everywhere it starts with the extended family. In African Pyramid countries it is the ethnic group or religious group. In Latin America it can be the region or rich powerful families. In some Southern European countries it can be the political party. The understanding of in-groups in the Eastern European cultures is definitely different than in other Pyramid ones. Considering the above factors – the question is what the best survival strategy was for citizens during these times (70 years in USSR and 50 years elsewhere). The answer is the reciprocal collaboration and support between like-minded people. A colleague of mine from that area wrote: “I would define the in-groups that East Europeans feel affiliated to, as any circle of people with whom: I – they share common views about what is right and wrong, what is acceptable behavior or not, and II – they share common past during which the shared views have been proven to be sustainable in behavior practices (tested by many life situations).” (internal discussion, 2017) It is clear that somebody establishes commonality and shared trustworthiness best in the formative years. A Romanian colleague of mine said: “Yes, we share belonging to one’s circle of relatives because we grow up together – but nowadays we do not feel automatic togetherness just by virtue of blood lines. I, for example, have nine first cousins but I keep relationship with only two of them – those that I have something in common with.”(internal discussion, 2019 Other strong bonds of collectivism are formed during school, university and military service (where existing). Because these formative years offer pretty good opportunities to deduct characters that are similar to your own. It is a common practice for politicians reaching the highest levels of power to appoint classmates or student-mates as their deputies, because they trust them. What strengthened this loss of belief in traditional in-groups like the extended family is that communism put a heavy emphasis on industrialization. This has resulted in urbanization of society at a much greater pace than if it had happened naturally; the consequences being – accelerated movement from kinship-oriented environment (villages and small towns) to a more alienated urban lifestyle. Writing about current Poland, Overbeek points at another element that tends to be forgotten. In describing the big differences between the big cities and the country one can still see traces of a historical fracture line between feudal lords and serfs. For centuries the Polish farmers were serfs, for sale with the land. It is a form of slavery sustained by nobility and only stopped in 1864. About the same time as slavery in the US. Overbeek says: “Up till today the Polish workers feel like white slaves. Second hand citizens.” (Overbeek, 2019) All these elements have discernable consequences: The traditional cultural understanding of “loyalty from subordinates and care by superiors” is not applicable, Yes, personal care and understanding by the boss is appreciated – but it does not automatically lead to loyalty. Caring superiors may find themselves trapped in abuse of their care. Yes, loyalty from the subordinates is appreciated – but it is not assumed. In fact, most often company rules are strongly process-oriented rather than people-oriented exactly because the assumption is that workforce is expandable. Religion Historically collectivism in Eastern Europe was a form of protection against the various dangers. Being between the big empires (Habsburg, Ottoman and Russian), or having foreign or corrupt leaders. Still there is always a need for people to belong to small groups they can trust (either friends or companies). This is an important factor in understanding the role of religion in Eastern Europe. The secularization of society under communism caused disruption of belonging connected to religion – with the notable exception of the Muslim communities in Central Asian and Caucasus. Interesting is to see that Pew Research Center found that religion is not seen as very important in the lives of for instance the Polish and Russians This is seemingly in contrast to what many politicians from these countries say and believe. For analysis of this contradiction it is important to see what cultural scholars found in looking into the relationship between religion and national culture. The question is if religions and their associated values are homogeneous and thereby create a coherent value system or that perhaps values are created by the dominant culture of the nation where people are born and are reflected in the reality of the religions? In 2012 Geert Hofstede and his colleague Michael Minkov analyzed this in a paper: “Nations Versus Religions: Which Has a Stronger Effect on Societal Values?” They uncovered two tendencies: 1. Global religions do not have such a “gravitational” effect on their subsidiaries in diverse nations. 2. In terms of values, nations however do have a “gravitational” effect, not only on the populations of their regions, but also on the nominally different religious groups inside a nation. This gravitational effect of national values has two aspects: “Homogenizing” and “Discriminant” Homogenizing: “The values of nominally different religious groups that live within a single nation tend to be fairly similar, resulting in relatively short distances between such groups as well as homogeneous national clusters.” Discriminant: “The nominally different religious groups that live within a single nation tend to be distinguishable from the religious groups of other nations. Religious groups from a single nation tend to cluster separately from those of other nations rather than intermix with them.” However, saying that religion is not very important in their lives is not the whole story. Many Eastern European cultures see religion as a key component of national identity. This means that religion plays a big role in the perception of us versus them. Like we described earlier in this chapter religion played a big role in creating cohesion in fighting the battles against the Ottoman empire or having foreign or corrupt leaders. Conclusion: National culture defines the social forces within a community involving its conventions for behavior, and Religion defines how the community members interpret their role in the universe, this teaching being based on the local culture, so different religions rise out of different cultures. Similarly, when members of one religion convert members of a foreign culture, often the resulting religion in that area is affected by the host culture. Taking this into account the Hofstede research can explain the religion and “morality” in Eastern European countries by the consequences of strong UAI, Hofstede states that in cultures with a strong UAI score there is a need for a more rigid social code. As a result there is a resistance in the strong UAI cultures (especially in combination with Collectivism) in accepting the equal rights of individuals in terms of sexual preference or alternative life styles. They call this decadency and they see themselves as bulwarks of traditional Christian values. A second reason for the tendency of politicians to refer to religion is that a state that says to represent the laws of heaven has unlimited power on earth. A long repressive regime can best be based on heavenly powers. With God on your side it is easy to persecute and suppress people. Migration and Foreigners It is no surprise that four decades spent in a rather closed and still relatively homogenous society behind the Iron Curtain, many people in the Eastern European countries are suspicious of foreigners. This is reflected in the attitudes towards immigrants, and above all the Muslim immigrants—even, perhaps especially, where they personally encounter almost none of them. Immigration and Emigration After 1989 many more people became more free to travel. This created a new problem: emigration. Substantial amounts of young people in Eastern Europe decided to move abroad to find employment and or to study. This led to the real problem of brain drain. The loss of talented people. In this sense Emigration is the region’s real problem, but immigration is its imagined one. As an example: May 7 2019 in Warsaw, a Polish psychotherapist and civil rights activist was arrested because she was not adhering to article 196 ‘Insulting religious feelings’. The Interior Minister said after her arrest: “We thank the police for the successful detection and arrest of a person who is held responsible for the desecration of the image of the Holy Maria, one of the most sacred icons of the Polish population.” “The refugee crisis that peaked in 2015–2016, bringing millions of migrants from the wider Middle East and Africa to Southern and Western Europe, was a defining moment in Central European politics. Populist politicians have skillfully exploited the fears of societies that were cut off behind the Iron Curtain for forty years, with relatively little recent experience of multicultural life.” (Timothy Garton Ash, 2019) In Hungary Prime Minister Orbán was quite successful in a propaganda campaign warning that the EU leaders were “plotting to swamp Christian Hungary with dark-skinned, Muslim immigrants.” The EU is holding the politicians saying this accountable. It is to be expected that in the future this will lead to further tensions between the EU courts and this attitude of some local politicians. Resistance Against the Elite The liberal, metropolitan elites who took advantage of the unregulated transition together with the former communists created a strong feeling of resentment by the people who were left out. This resentment is also directed at the Western type of liberal market economy. “Central European populists combine somewhat left-wing economic and social policies with a right-wing, even reactionary, nationalist and xenophobic rhetoric. So disaffected voters are invited to escape the atomization of a superficial, Western-style consumer society, back into the bosom of the most traditional sources of community and identity: the family, the church, and the nation. The populist fulminate against “decadent, feminized, LGBT+-supporting Western European societies” They create the image of a fight between Western European nations addressing: “the problem of an aging and shrinking population by importing Muslim migrants. While traditional societies like Hungary and Poland “will solve that problem the old-fashioned Christian way, by having more children”. (Timothy Garton Ash, 2019) Politicians sensing the dissatisfaction in large parts of the population understand that it is not just an economic issue. It is a matter of giving back to people a sense of dignity. This is also behind the recent actions of the Polish Law and Justice party to hand out more cash to families. Some observers see it as “an expression of concern”. Law and Justice ideologists actually talk about “the redistribution of dignity”. Ashford says: “Especially in Poland and Hungary, the ruling parties also play off the sense of historic injustice, arguing that what happened in 1989 was not a true revolution. The real anticommunist revolution, they claim, only began when they themselves came to power”. Democracy and the Need for Autonomy. Another factor for the uneasiness in finding new rules for democracy in Easter European countries is that there is still not enough real understanding that democracy doesn’t take the same shape in every country. In a paper on the EU (Wursten, Lanzer, 2012) it was shown how democracy in the UK is different from democracy in Switzerland, the Netherlands and France. These differences can be explained by the value configuration of each country. It was also shown that it can be explained in a systematic way by the Seven Mental Images. To analyze the confusion in the discussions about the shape of democracy a conclusion from a paper on Happiness (Wursten 2018) is noteworthy: What is very important for the well-being of people is the perception of autonomy. This autonomy is defined as the freedom to make your own decisions and to determine your own future as basic needs of adult human beings. The importance of these basic needs was recently confirmed again by psychiatrists. (Verbraak, C., 2018) The decline in support of democracy can be explained (to a great extent) by the perception of many people that they do not have a say in the decisions shaping their lives as a consequence of globalization of businesses and internationalization of decision- making, for instance in the EU. Reports show that there is a general feeling in Middle and Eastern European countries of a lack of control over people’s lives. Citizens of these countries complain that after the fall of the dominating Soviet Empire they expected to be more free. What happened instead is that, in their perception the ideology changed, but many of the people in power during Communism are still in positions of power nowadays. Moreover, they feel that they were freed from the coercion by the Soviet Union and voluntarily joined the European Union. But now they discover that the rules of the EU are strongly limiting their freedom of decision-making. It is frustrating because in their minds it amounts to a perceived feeling of again lacking control over their own lives. The future What is to be expected looking at the time between the fall of communism and the present? 1. From a cultural point of view. We showed that the superficial layers of culture were polluted. This affected the “rules of the game”, the consequences and clear mechanisms of the cultural Mental Image. The necessary trust between authorities and citizens, between bosses and employees was destroyed. Slowly this trust is restored. The European Union is helping because of the pressure they put on the single member states in staying within the boundaries set by the EU for democracy and the rule of law. Citizens of these Eastern European cultures are seeing the EU as a positive means to keep their own politicians at bay and to prevent possible corruption by their leaders. Even if the country culture is making it difficult. In this sense it is interesting to look at the connection between corruption and corruption. Take Power Distance: the saying is “power corrupts, absolute power corrupts absolutely.” Or take collectivism. Analysis of the rule of law shows that the human rights as part of the law system is something that is “natural” for Individualistic cultures where the starting point of morality is the individual. In collectivist cultures morality is in first place for the people of the in-group. As Lanzer formulates it: Everything for my friends. For others the rigor of the law. (Lanzer, 2019) In this sense it can be shown that enforcements of the EU laws a positive influence in the eyes of the citizens. Recent research by Pew Research center is confirming this. See below. At the same time the EU should understand that it is very important that the single states in Eastern Europe should further develop the perception of autonomy. In this sense it is a warning signal not to force these countries in a process of increased centralization. This is of course equally true for the Western EU members. Brexit should be a warning sign. As Cummings formulated the successful slogan: “take back control”. It is a matter of survival to go back to the original formula: “subsidiarity”. The higher level should only do what the lower level cannot do. A warning for leading politicians like Verhofstadt and Macron. ( Wursten 2019), ( Wursten, Lanzer 2012) Another warning sign about this is given by the EU citizens in the perception that the people at the top are not interested in what they think. One of the dangers of a nowadays globalized world is that there is a growing emotional reaction of the citizens of nation states that the cosmopolitan elite easily is deciding about moral and economic issues without taking the interests of the ones that have to live the consequences into account. This leads to support for populist propaganda. What needs attention is that data show that most people in Central and Eastern Europe say that the post-communist era has been good for education, living standards national pride and even spiritual values. They however showed doubts about law and order, but were negative about health care and family values. The Economic Factor One more reason to be careful in forcing the Eastern European cultures in a centralized EU mall is to look at the economic situation. In general PEW Research center measured a positive mood towards the integration in the EU economy. This positive mood is really important! What however not should be forgotten is the prediction of the Economist that it would take 50 to 90 years before the new access countries would be on the same level as the existing countries. Notes: 1. The confirmed value preferences Hofstede found empirically are in shorthand: PDI. Power distance Index: the way hierarchy is accepted as something existential or as something created for convenience. IDV. Individualism versus collectivism: describing the emphasis of loyalty. To the Individual or to the In-group. MAS. Masculinity versus Femininity: motivation by competition and challenges or by cooperation and consensus seeking. UAI. Uncertainty Avoidance Index : the extent of the need for predictability. Is dealing with unknown risks uncertainty experienced as positive drive or a negative one. In terms of research methodology it is important to emphasize that the 4 value dimensions are independent. However: In applying the value dimensions for analysis in real life it is rare that explanations can be given by one single dimension. In most cases it is the combination that gives the full picture. 2. The Mental Images The key issue is that the combination of the fundamental value dimensions is leading to a “Gestalt” , something new. An important consequence is that the different combinations lead to 6 different “pictures” in the mind of people of what society and organizations look like. Hence the name :”mental images”. Each mental image represents a cluster of countries which have certain characteristics (scores) in common. 1. The contest model (`winner takes all ́) Competitive Anglo-Saxon cultures with low power distance, high individualism and masculinity, and fairly low scores on uncertainty avoidance. Examples: Australia, New Zealand, UK and USA. 2. The network model (consensus) Highly individualistic, `feminine ́ societies with low power distance like Scandinavia and the Netherlands. Everyone is involved in decision-making. 3. The organization as a family (loyalty and hierarchy) Found in societies that score high on power distance and collectivism and have powerful in-groups and paternalistic leaders. Examples: China, Hong Kong, India, Indonesia, Malaysia, Philippines and Singapore. 4. The pyramidal organization (loyalty, hierarchy and implicit order) Found in collective societies with large power distance and uncertainty avoidance. Examples: much of Latin America (especially Brazil), Greece, Portugal, Russia and Thailand. 5. The solar system (hierarchy and an impersonal bureaucracy) Similar to the pyramid structure, but with greater individualism. Examples: Belgium, France, Northern Italy, Spain and French speaking Switzerland. 6. The well-oiled machine (order) Found in societies with low power distance and high uncertainty avoidance, carefully balanced procedures and rules, not much hierarchy. Examples: Austria, Germany, Czech Republic, Hungary, German speaking Switzerland. A description of the culture clusters Literature: Economist Intelligence Unit. 2012 Europe enlarged: Understanding the impact In co- operation with Accenture Oracle N M Rothschild & Sons Overbeek. E. 22-5-2019. De erfenis van Poolse horigheid Heren en hufters. In: De Groene Amsterdammer. Privatization in Russia. Wikipedia Huib Wursten The 7 Mental Images of National Culture. Hofstede Insights 2019, ISBN9781687633347. Timothy Garton Ash, Time for a New Liberation? The New York Review of books. October 24, 2019. Hofstede, G., Hofstede, G.J., & Minkov, M. (2010). Cultures and Organizations: Software of the Mind. Berkeley: McGrawHill. Nations versus Religions: Which Has a Stronger Effect on Societal Values? Minkov, M. & Hofstede, G. Management Int Rev. (2014) 54: 801. doi:10.1007/s11575-014-0205-8 Wursten. H. .(2017) Culture, religion and ethics. What is the connection? https://www.academia.edu/32293280/Culture_religion_and_ethics._What_is_the_connection. docx Narodowy Bank Polski (2017). Is Central and Eastern Europe converging towards the EU- 15? NBP Working Paper No. 264 Economic Research Department Warsaw, 2017 Wursten, H., & Lanzer, F. (2012). The EU: the third great European cultural contribution to the world. Retrieved from http://www.clubofamsterdam.com/contentarticles/86%20Europe/itim%20eu%20report. pdf. Fernando Lanzer. Democracy in Latin America. JIME 2019 Q4 Wursten, H. (2018a). Culture and Happiness. Some reflections. Journal of Intercultural Management and Ethics, 3, 19- 30. Verbraak, C. (2016, December 16). Een leven zonder angst is ongehoord saai. Retrieved from:https://www.nrc.nl/nieuws/2016/12/16/een-leven-zonder-angst-is-ongehoord-saai- 5774858-a1537150. Internal discussion in the Hofstede Insights Group. (Participants: Daniela Kaneva, Georges Lapascu-Pruna, Jana Droessler and Huib Wursten 2016) Surveys PEW Research Center: 1. European public opinion three decades after the fall of communism. European values -00- 09. pg. 10-15-19 2. Pew Research Center. Surveys conducted 2015-2017 in 34 countries. Eastern and Western Europeans differ on importance of religion, views of minorities and key social issues 3. Pew Research Center Spring 2019 Global Attitude Survey Q55a-f. Q57a-c 4. Pew Research Center Spring 2019 Global Attitude Survey Q 50a 5. Pew Research Center Spring 2019 Global Attitude Survey Q 21a-g 6. Pew Research Center Spring 2019 Global Attitude Survey Q 8d-Q13 & Q14