The political and economic transformation of Eastern Europe in the 1990s is undoubtedly one of the important and interesting changes in the history of the old continent and of post-war world politics. Even the most conservative observers agree that the process is irreversible. Eastern Europe in the mid-1990s will be different from the same region in the mid-1980s dominated by Soviet influence, communist rule and centrally planned economies.

Eastern Europe is attempting to transform centrally planned economies into market or market-oriented economies, and democratizing their societies. This process is characterized by instability and unpredictability. The Soviet Union, the smaller Eastern European Five and East Germany (in unified Germany) are suffering from the growing pains of over-rapid changes, and from the painfulness of readjustment between the recent economic period and the new one. The major problems of this readjustment are the serious macroeconomic imbalances and the severe crises of confidence in the populations. The smaller Eastern European countries are confronted also with the necessity of clearly defining their economic development strategies in a rapidly changing political and economic environment. They all still lack a middle and long-term strategy for relations with the Soviet Union and within the CMEA on one hand, and for relations with the Western industrialized countries (and particularly with Western Europe) and the developing countries on the other hand. The Eastern European countries need to have a model and an alternative model of the economic reform. Another problem they are confronted with is the need to secure basic social welfare in order to maximize the economic programmes. The excess demand creates serious difficulties in implementing these programmes.