B30.2383.W1 Economies in Transition

Two major socioeconomic events occurred in the 20th century: the creation of the centrally planned economy (CPE) in the late 1920’s and the dismantling of the CPE and its replacement with markets, after both the fall of the Berlin Wall in 1989 and the break-up of the Soviet Union in 1991. Directly affected by this transition are the twenty-nine countries known as the “economies in transition (EIT), ” eight of which became members of the European Union (EU) in May 2004. Of those eight, seven were either part of the former Soviet Union or in its sphere of influence. Two additional former Soviet-bloc countries will join the EU in January 2007. Slovenia, which joined in the first wave, is the first EIT to meet the requirements to adopt the euro, and will do so January 1, 2007. Russia, which came to an agreement with the EU over issues relating to EU enlargement, now conducts more than one-half of its trade with the EU. The two are also interdependent with regard to energy, as the EU is the largest purchaser of gas from Gazprom, the Russian state-controlled natural gas company. The political and economic ramifications of these trade connections are still evolving. Some of the countries in the region have already acceded to the World Trade Organization (WTO), but Russia