Author of the article: Irakli Gambashidze

After the collapse of the Soviet Union, the greatest economic problems began in the countries of Eastern Europe. For several years, these countries were dependent on Russia and other Soviet republics, so they did not have the opportunity and experience to develop independently. Some of them were able to achieve rapid European integration, which helped to solve economic or social problems. In this article, we will consider the example of three states and find out how their accession to the European Union helped them.

Estonia

The process of declaring Estonia’s independence begins after the “Baltic Road” held in 1989, the last of which was a peaceful protest against the illegal occupation of the Soviet Union. From Tallinn, through Riga, to Vilnius, a 600-kilometer-long live chain was created, in which more than 2 million people participated and peacefully protested Russian imperialism. The processes started in 1989 were crowned with the declaration of independence on August 20, 1991.

After the declaration of independence in 1993, the level of inflation in the country reached 90%. Estonia started to carry out rapid reforms, which had to be transferred from the Soviet economic system to the free market:

In 1994, Estonia became the first country to introduce the flat tax system , which means equal taxes regardless of income.
Such economic freedom was an ideal environment for growing businesses – in 1995, up to 10,000 new companies were registered.
Because of the state created in the country as a result of rapid economic reforms and the free market, the inflation level fell to 3.3 percent by 1999.

Estonia began the process of European integration soon after its independence and, after 6 years of negotiations, became a member of the European Union in 2004. As a result, Estonia became eligible for EU funds, which could make a significant contribution to the development of the country (Structural Funds and the Cohesion Fund). Estonian citizens also became eligible to apply for EU loans, which contributed to the growth of local production and the development of the private sector.

As we know, Estonia is a leading state of technological development in the post-Soviet space. This technological progress would not have been possible without the active support of the EU. The “e-Estonia” project, which was founded in 1994, aimed to transition to a digital model of state management, which contributed to its modernization:

Thanks to the project, from 2004 to 2009, the number of Internet users increased from 53% to 73%, and today this figure has risen to a record 91%.
It should be noted that both then and now the percentage is higher than the EU average.

Estonia was able to convert more than 95% of its registered tax system to an electronic system, and almost all banking transactions were completed electronically. Any start-up entrepreneur in Estonia can register their business from a personal device, which contributes to the development of the private sector. Within the framework of e-Estonia, it became possible to participate in elections electronically, which was established in 2005. In the 2023 parliamentary elections, 51% of voters used the Internet voting system.

One of the most important projects, which was also implemented with the help of the European Union, is the Baltic railway. It is likely that the construction will be completed by 2030 . Its budget is 15.3 billion euros and 85% of it is financed by the EU. The project aims to connect the Baltic Sea with EU states by transport.

This railway line starts from Helsinki and continues to Poland, and its total length is 870 kilometers.
Thanks to the project, it will be possible to extend the European transport system in the Baltic region, which will make travel and movement even easier.
Trade relations between project participating states (Poland, Lithuania, Latvia, Estonia and Finland) will also be simplified.

EU aid to Estonia is still not stopped. This year, the European Investment Bank invested 400 million euros in the Estonian economy and private sector development to develop green energy resources and reduce greenhouse gas emissions.

Lithuania

After Soviet imperialism, Lithuania and Estonia followed a common path, from the shackles of Russia to independence. On March 11, 1990, Lithuania became the first Baltic state to gain independence, setting an example for other countries in the region to fight for freedom. Lithuania’s development would have been difficult without the help of the European Union and the programs it funded.

Foreign direct investments were important for the rapid recovery of Lithuania. In order for the state to be interesting for foreign business, it is necessary to have a sense of security. The guarantor of this is the European Union and the standards found in the member states.

Since the accession, Lithuania has become more attractive for investment, as evidenced by statistical data on how PUI (foreign direct investment) has increased.
It is worth noting the fact that more than 80% of foreign investment in Lithuania comes from EU countries, which further helps the country in infrastructure development.

The most important project implemented in Lithuania with the financing of the European Union was “Via Baltica”. This highway connects the Baltic states with Central Europe. In particular, a direct highway runs between Prague and Tallinn, the length of which is 970 kilometers, and 269 kilometers of it are in the territory of Lithuania. “Via Baltica” is important for economic progress in the region (especially Lithuania), as it is the main transport and economic link between Poland and the Baltic States. A large part of the project is financed by the EU, the cohesion funds allocated up to 80 million.

One of the next important projects was the Klaipeda LNG terminal, which began operating in 2014. The goal of the terminal was to limit the consumption of Russian energy resources in Lithuania and to supply it from global markets. European support for the implementation of the project was crucial and would not have been possible without a loan of 87 million euros allocated by the European Investment Bank. Thanks to the project, Lithuania has become more energy independent and its demand for Russian gas has decreased.

It should be noted that Lithuania is the biggest supporter of Georgia on the path of integration into the European Union, and based on its own experience, it gives us advice so that we can make the right choice and make relevant decisions in the move towards democracy. For example, Lithuania was one of the states that made statements against the Russian law and supported the imposition of sanctions against the Georgian government.

Romania

Romania’s path to the European Union is particularly interesting. From the communist regime established by Nicolae Ceausescu to democracy, the country had to overcome many obstacles and economic problems that would have been impossible to overcome without the help of Europe and the West.

1989 was the most difficult period for the Kremlin, as there were many protests against the communist authorities (April 9, Velvet Revolution, Tiananmen tragedy, etc.), including the revolution against Ceausescu in Romania. The revolution started on December 16 and ended on December 25 with the execution of the country’s ruler. This case represents the most aggressive version of the struggle against the communist regime, but it is considered the beginning of the construction of democracy in Romania.

In 1990, democratic, multi-party elections were held in Romania.
In the elections, 70 parties took part, and the revolutionary force “Path of National Salvation” won an absolute majority in the newly formed parliament.

The first years of Romania’s independence were quite difficult. 1990-96 years were political instability, economic hardship and many social problems in the country. The coalition of the newly elected ruling party soon split into two, which led to frequent changes in the government. Economic problems in the 90s were quite painful for Romania. As we mentioned above, the goal of Russian imperialism is to destroy the possibility of independent development, which was more or less achieved in this country:

The state was dependent on Soviet Russia, whose collapse and the disappearance of its trading partner were followed by an economic crisis.
In 1991, the annual change in Romania’s gross domestic product (GDP) set an anti-record and decreased by 13 percent compared to the previous year.
Unemployment also increased — in 1994, the unemployment rate reached 8.2%, which is also an anti-record in the country’s history.
Emigration increased – in 1990-93, more than 170,000 people left the country.

Romania’s economic progress and their steps towards the EU are almost synchronous. Romania’s exit from poverty would not be possible without the help of the European Union, only the European Investment Bank has given the country a total loan of up to 20 billion euros. Many projects were financed, including the financing project for small and medium businesses in Romania . As a result of the project, the private sector developed and the GDP increased. At the end of the 90s, Romania received the status of a candidate for the European Union, but there were still problems that the country overcame with the European Union.

Project “Fare” (beacon in French) was crucial for Romania to get back on its feet, which aimed to provide economic and political assistance to candidate states so that they could meet the relevant standards before joining the European Union. Thanks to the program, Romania received more than 2 billion euros in aid between 1992 and 2003, which was used for the reforms that made it possible to develop the country and put it on the democratic path.

Corruption was the biggest problem, as in other former communist states. It was not easy to dismantle the corruption schemes established after the Ceausescu regime:

After joining the European Union in 2007, government spending became even more transparent; in such an atmosphere, it was practically impossible to steal budget money and spend it improperly.
In 2007, with European support, a Cooperation and Verification Mechanism was created, which forced the government to implement new and correct reforms and set specific targets, after achieving which it granted more rights as a member state of the European Union.

After joining the European Union, many economic and infrastructural projects were implemented with their financing. Among them, the A1 and A3 motorways, built at this time, these projects help to better connect Romania with Central and Eastern Europe economically and in terms of public transport.

The Effect of the European Union and Probable Forecasts After the European Integration of Georgia

The effect of the European Union is precisely the experiences that other post-Soviet states, already united in the European family, leave to us. For absolutely all of them, the relationship with the EU and then the accession ended with positive results and success.

We know that for many years, even before the candidate status and even after it, the European Union has been financing a number of projects in Georgia, for example, the organization is trying to develop the agricultural culture of the country. The “ENPARD” project started in 2013 contributes to the creation of the necessary infrastructure for agroculture and the improvement of rural employment. 234 million euros were spent by the EU for the implementation of the project .

The organization also promotes the development of small and medium businesses in Georgia. Only in 2022, the European Union has spent up to 341 million euros in the development of the Georgian private sector within the framework of the EU4Business project. Also, during this period more than 24 thousand jobs were created and 45 projects were financed.

This is only a small list of the programs that the EU and its member states finance in Georgia. After joining the European Union, these projects will be further expanded and will take on a large-scale appearance. Even these few examples of the work done by the EU for the small business of Georgia prove to us that the cooperation with Europe is beneficial for the political goals of the state and has a positive impact on the economic and financial situation of every Georgian.