Financial Times
December 13, 2011
It was not only western European governments that breathed a sigh of relief after the all-night “save the euro” summit held in Brussels in late October. The news that the eurozone’s leaders had agreed on a plan of action for writing off Greek debt, recapitalising banks and expanding their region’s financial rescue fund was equally welcome in the capitals of central and eastern Europe.
To be sure, many of the plan’s essential details were left to be decided at a later date. But any sign of progress in overcoming the eurozone’s sovereign debt and banking crises is positive for central and eastern Europe. The area’s economic health, the strength of its financial sector and, in the last resort, its political and social stability are intimately connected to the outlook for the 17-nation eurozone. In short, if the eurozone sneezes, it is difficult for its neighbours to avoid catching a cold.
Several central European economies have already felt the impact of the eurozone’s economic slowdown in the second quarter of this year. Various Balkan nations are suffering from Greece’s ever-deepening debt crisis and recession, which have disrupted trade and investment.
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