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Eastern Europe faces is at high risk of strikes and demonstrations which lead to institutional paralysis, a slowdown in economic activity and breaches in supply lines.



Photo: Getty Images


Photo: xxx

Eastern Europe is experiencing an unprecedented wave of civil unrest in the form of demonstrations, boycotts, strikes and occasional blockades. The underlying causes of this are complex.


The current wave of unrest was triggered by the financial crisis at the start of this decade, and the aftershocks continue today, particularly in the Balkans. Many of the region’s governments have struggled to manage large debts built up last decade and been forced into painful austerity programmes. Unsurprisingly, groups such as trade unions, pensioners, war veterans and farmers have all mounted strikes and demonstrations in protest at spending cuts and tax rises which harm their interests. In the last quarter, Albania, Bosnia and Serbia have all experienced major strikes by unions. The situation is different in EU states, where economic success is generating its own tensions as strong wage growth in the private sector leads public sector workers to strike for pay increases. Police, health workers, dock workers, teachers and municipal employees have all mounted strikes in countries such as Hungary, Latvia, Romania and Slovenia.


However, while fiscal cutbacks may be a trigger, the evidence suggests that widespread unrest has deeper causes – not least since countries such as the Baltic States have passed through a period of acute social and economic stress without mass demonstrations. Across the region, there is a powerful sense, felt particularly by the generation born after the collapse of communism, that the governing institutions are irresponsive to the needs of the people and that elections are an inadequate mechanism for resolving grievances.


In some cases, this is because the institutions have been captured by local oligarchs, who have abused their power to run the state in their interests, at the expense of broader economic development. There are many examples of this leading to unrest. In Moldova, protestors are currently demanding the resignation of the government, which is tainted by allegations of corruption. In Montenegro, protestors are calling for the resignation of the prime minister who is not only the country’s most powerful businessman but has run Montenegro in some capacity for the entirety of the last 25 years. And in Macedonia, protesters have taken to the streets after evidence emerged of corruption and organised criminality at the highest levels of state administration.


In other cases, the state has also been captured by an external actor. Central Europe and the Baltic States have experienced months of demonstrations against the demands of the EU to take in quotas of migrants from Africa and the Middle East. Outside the EU, governments in the Western Balkans have been obliged to take measures seen by the people as fundamentally contrary to their national interest, such as the Kosovo government’s decision to devolve power to its Serbian enclaves and agree a border demarcation with Montenegro in the latter’s favour, or the Montenegrin government’s recent decision to join NATO.


Similarly, Russia has partially captured the governments in its border regions, and is extending its influence deeper into Central Europe and the Balkans. Moscow’s extensive control over Ukraine’s internal politics is sufficient to complicate, and possibly prevent Ukraine’s integration with the West. In Moldova, Russia’s influence over parts of the political class has already succeeded in drawing the country away from Europe and back towards Russia, generating a massive popular backlash.


The other factor, which underpins the recent outbreak of unrest, is the existence of deep cleavages in most Eastern European countries between distinct interest groups, each with their own political representatives. When combined with a legacy of authoritarian and winner-take-call  politics, majority rule by one group can severely disadvantage the other, leading to direct action on the streets.


In many countries, the key cleavage is along urban/rural lines, separating liberals from social and economic conservatives. Demonstrations this year in Poland, Hungary and Croatia, while ostensibly about matters such as press freedom or the composition of the constitutional court, are all fundamentally expressions of a clash of ideologies in divided societies, which cannot decide whether to embrace globalization with its free markets and movement of peoples, or uphold a traditional way of life.


Meanwhile, in the Western Balkans, societies are internally divided along party political lines in a traditional patronage system, meaning that people affiliated to the ruling party monopolise the economic opportunities. In Albania, to take but one live example, the campaign of disobedience, which the opposition is now leading in protest at government corruption, is motivated in large part by its desperate need to return to power and restore its financial position. In other cases, the cleavage is ethnic. In both Kosovo and Ukraine, two fragile and ethnically divided states, hardline nationalists have recently staged violent demonstrations at government plans to offer concessions to minority groups, which are seen to pose a threat to the integrity of the state.



Central and southeastern Europe will remain vulnerable to civil unrest. On the upside, the return to economic growth almost everywhere in the region will calm the political and social environment. Rising real wages and a decline in energy and food prices will also take the edge off the cost-of-living crisis, which has afflicted the region in recent years.


On the downside, the region will be subject to multiple external pressures, ranging from financial turbulence in the euro zone; to manipulation by outside powers such as Russia; and immigration by non-Europeans. All of these will expose the limits of what weak governments with (in many cases) severe financial problems can do to protect their populations against these threats, leading to public unease. Alongside this, people will continue to be concerned about standards of governance in the region, especially the young, who are generally cognisant of the outside world and measure the performance of their own government by the standards of the West.


Popular pressure on the political institutions has the potential to produce varied outcomes. In some cases, the removal of a government can produce better government and strengthen the rule of law. In other cases, a period of social unrest can induce popular support for more authoritarian government, which can guarantee order regardless of the wisdom of the policies it pursues.



Immediate Impacts


  • Strikes and demonstrations will cause breaches of supply lines and interrupt business continuity.


  • Domestic political volatility will unnerve business and complicate lending, investment and recruitment decisions.


  • Popular dissatisfaction with government will fuel outward migration, usually of recent graduates whose departure imposes a high cost to an economy.


Potential Impacts


  • In its more extreme form, civil unrest can cause paralysis in government, delaying essential reforms and encouraging economically retrograde policies.


  • Violent demonstrations can result in damage to assets, including vandalism, looting or arson attack.


  • In divided countries, demonstrations against the government can morph into a constitutional crisis that threatens the integrity of the state.


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