1216 Ch. 29 • Democracy and the Collapse of Communismof state-owned property engendered problems. In Hungary, foreign con
glomerates bought up property that had been held by the Communist state.
Former owners of property collectivized by Communist regimes demanded
their lands back. Yet, at the same time, in the former Soviet satellite states,
the attraction of joining the European Union itself encouraged economic
and political reform. In some countries, members of the former Commu
nist elite managed to get hold of valuable assets. The end of authoritarian
rule led to major increases in violent crime, above all in Russia and Bul
garia, where organized crime has become powerful as one unstable govern
ment has followed another (including, remarkably enough, the period of
2001—2005 when the man who had in 1946 briefly taken the title of “tsar”
of Bulgaria became prime minister). Belarus remained a virtual dictator
ship, a throwback to another time.
Foreign investment was far from adequate. In the short term, galloping
inflation (up to 20 percent a month in Russia and 40 percent in Ukraine)
engendered bitterness. Despite the fact that its Western creditors in
March 1991 canceled half of the debts owed by Poland, the economic out
look in that country seemed bleak. The Russian economy virtually col
lapsed in the 1990s, and by the end of the decade about 30 percent of the
population of Russia was classified as impoverished. With taxpayers simply
not paying up, Russia barely avoided bankruptcy in 1998 by postponing
paying off $43 billion in short-term loans. Romania, Bulgaria, and Albania,
in particular, were confronted by the ravages of decades of Communist
economic policies, leaving a ruinous emphasis on heavy industry, com
pounded by old technology, combined with an inefficient agricultural sec
tor. However, in 1997, the new Romanian government undertook major
economic reforms with the help of loans from the World Bank and the
International Monetary Fund. These included the reduction of state subsi
dies to companies and the privatization of many state-run businesses.
Nation-states, which many liberals long assumed were necessary before
constitutional rights and equality could be assured, have not always turned
out to be liberal and tolerant. Even if bilateral treaties officially ended
long-simmering disputes over some territorial boundaries, such as those
between Germany and Poland, Hungary and Romania, and Hungary and
Slovakia, tensions still remain between Turks and Bulgarians in Bulgaria,
Hungarians and Romanians in Romania, Slovaks and Hungarians in Slova
kia, and Albanians and Macedonians in Macedonia. In the Czech Repub
lic, the Republican Party denounced in shrill nationalist tones Germans
and, above all, the minority population of gypsies (Roma) until the party
was dissolved in 2001. In Hungary and Romania, too, right-wing racism
has focused on Roma, as well as Jews. The potential for ethnic violence in
Russia and the other former Soviet republics also remained. Twenty-five
million Russians lived in other republics within the Soviet Union at the
time of the latter’s disintegration, 17 million of whom were in Ukraine. It
was telling that in Estonia, no sooner had Communist rule ended than new