New “must-read” economic policy reading on regional impact of war in Ukraine

War, migration, economic and budgetary problems, reconstruction – all these topics are also covered in the publication, which  was presented at the end of October by László Csaba (Corvinus, CEU), György Surányi (Corvinus) and the editor László Mátyás (doctor of the Hungarian Academy of Sciences, professor at CEU) at Corvinus, at the meeting of the Committee for Economic Sciences of the Hungarian Academy of Sciences. The English-language book was published by Springer this summer and is titled Central and Eastern European Economies and the War in Ukraine.  

The chapters of the book deal with fiscal policy, economic conditions and indicators, inflation, foreign trade, sanctions, and the impact of the war in Ukraine on all these in the aforementioned countries. The chapter on economic growth and resilience is open access and freely downloadable from the publisher’s website. 

Most of the authors are Hungarian – among others István Kónya (Corvinus), Júlia Király (former Deputy-Governor of the Central Bank of Hungary), Dóra Győrffy (Corvinus), Csaba László former Minister of Finance, Péter Benczúr (CEU), Zsóka Kóczán (European Bank for Reconstruction and Development) – but studies by foreign economist authors dealing with the Central and Eastern European region are also included. As László Mátyás emphasized, the chapters of the volume are based on rigorous data analysis, and in his opinion there was a lot of work in this. As editor, he remarked, “I have removed the political comments from the volume.” 

Tight room for manoeuvre for the budget 

Professor Csaba introduced the book first, starting by saying that “when you want to praise someone you say that his or her study was published by Springer“. For him, the most important thing in the book was that it reveals that in the first quarter of a century of the regime change, economic convergence was clear in the countries of the region, but this has stalled in recent years: due to the war crisis, the region has slowed down. The book also states that the impact of the war in Ukraine on energy and inflation was temporary. Professor Csaba believes that the authors demonstrate well that the budget space is tight, and he believes that the book also sends an important message that “it is not about just wanting it and the economy is kicking in“.   

In his view, the issue of migration is very important: it is not south-north migration that is important to the European economy, but east-west migration. Tens of millions of people have left Ukraine, and host societies and economies have coped relatively well with this challenge. Finally, according to Professor Csaba, the question of Ukraine’s reconstruction is also extremely important: in his opinion, we must think about this in advance. The professor also talked about some of his feelings of absence in connection with the volume, he thought it would have been good to have a summary chapter. 

Reconstruction needs to be thought about now 

In György Surányi’s opinion, “there are an astonishingly large number of successful works in the volume”, and in his opinion all ten chapters would deserve a separate presentation. “Despite the war and sanctions, Ukraine is still functioning at the moment, this is a miracle,” the former central bank governor underlined. He also spoke about how important it is – although we are still waiting for a ceasefire at the moment – to think about reconstruction now, for which the EU must definitely explore new resources. The EU has found a good way to do this after the pandemic through joint bond issuance. Surányi also spoke about the chapter on sanctions, saying that in his opinion this has been very successful in one area, energy sanctions, oil and gas prices have recovered, and all this has also played a role in bringing down inflation.  

“Unfortunately, reading it as a Hungarian, the book reveals that we are the worst in everything in the countries of the region, and this also applies to the budget and social protection. Hungary has been the least separated from Russia, and we are the only ones in the region who give price support to everyone in the energy industry – even the Polish right-wing government has given the most money to energy modernization,” Surányi explained.  

Key to understanding the region: from migration to oligarchs  

Surányi also emphasized that “if anyone wants to understand what happened in the region, they should read this book.” However, the former central bank governor was somewhat critical of the chapter on inflation in the volume, saying that “this chapter uses serious mathematical methods and models, but somehow reality does not reflect all this. Methods and models should be confronted with experience,” he claimed. (Later, one of the authors of the chapter present responded to Surányi’s suggestion that the target audience of the volume is not the Hungarian reader, but those who are not familiar with this region: the goal was for the authors of the chapter to find a method by which the countries of the region can be analyzed in a unified way.)  

In connection with the presentation of the book, other important questions were also mentioned: Ukraine is currently experiencing a demographic catastrophe, as millions have left the country, and the big question is who will return there and with what qualifications, and there are only assumptions about this at present.  

According to Professor Csaba, many questions remain open in the latter reconstruction, and it is impossible to know who will invest there without NATO’s security guarantee even if the war ends. Surányi took the view that Ukraine cannot be rebuilt with private capital or loans, and in his opinion donations are also needed. 

The issue of Ukrainian oligarchs was also discussed: according to some opinions, the reconstruction of the country is realistic if corruption can somehow be controlled in the country. There is also an opinion and experience that if there is a ceasefire, oligarchs will reappear in Ukraine. Obviously, the outcome of the US election also plays a role in these latter questions – this was still an open question on the day of the meeting. 

At the meeting, former Finance Minister Csaba László (also author of one of the chapters in the book), spoke about how being a member of the eurozone helps a country finance its public debt. He also attaches importance to the issue of refugees, as he said that he himself had helped to transport Ukrainian refugees at railway stations. His personal experience has been that he has met mainly female refugees, but of course he does not know who will return to Ukraine when the time comes, women or men.