When the iron curtain was swept away on that miraculous night of November 9, 1989, it exposed some of the deepest differences between geographic neighbors the world has ever recorded. The 13:1 gap in GDP per capita between Poland and the future united Germany was double that between the United States and Mexico.
That same night, my pregnant mother and her siblings were working in the underground economy on an organic farm near Frankfurt, helping to meet the needs of a new class of environmentally conscious Germans. My family admired that country where “you never got lost on a road.” People in Germany drove immaculately clean cars and blue-collar workers could play Stille Nacht on various instruments, which they did on the farm at Christmas 1989, leading my mother to marvel at an education system that could equip people so universally not only with marketable skills but also with an ingrained sense of beauty.
Neighboring countries tend to have comparable levels of development. A common security context, the indirect effects of investments, migration, remittances and regional supply chains create geographic pockets of well-being or poverty that transcend borders on the map. A strong physical barrier (the Himalayas between China and Nepal, for example, the barbed wire that runs along the border with Korea, or the Berlin Wall) is needed to sustain economic chasms like those between Poland and Germany in the era of my mother.
But the economic prospects of Eastern Europe quickly revived with the economic integration that took off in Europe in the 1990s. The reunified Germany wanted to have something like the “West” in its immediate eastern neighborhood, even if it required a degree of work. political heavyweight in other parts of the EU. France was much less interested in adopting post-communist orphans in a united Europe.
Like China in the 1990s, Eastern Europe embarked on its capitalist journey as a mere subcontractor. Ready pieces would be parachuted into sealed Lego sets to be assembled by cheap and docile labor that simply followed instructions before exporting the low-value-added finished goods to wealthier countries. At this stage, the low cost of labor encouraged foreign investment. From 1992 to 2014, wages in Poland fell from 63% of GDP, the level of today’s unionized Germany, to 46%, the second lowest in the EU. Car factories in Germany paid workers 3,122 euros a month, almost four times more than their Polish, Czech, Slovak or Hungarian colleagues, who earned 835 euros for similar work.
“We built capitalism without capital,” Jan Krzysztof Bielecki, who became Poland’s prime minister in 1991, a quarter of a century later, told me when I questioned what seemed to my generation an economic model based on voluntary semi-reliance. It replaced a forced communist-era economic dependency in the east, courtesy of Soviet tanks.
In the early 2000s, about to join the ranks of EU citizens, my greatest personal hope was a world-class education. I was trying to learn more languages, smashing my head against the German grammar textbook aptly named Deutsch – deine Chance (German – Your Chance).
Polish organic farmworkers were just waiting to come out of the shadows and into the legal and tax-paying economy. But the farm in Germany, dedicated to environmental ethics, showed less commitment to its human counterpart. Illegal workers worked double shifts on little sleep, with inadequate health and safety protection on the machines operated 24/7. One of those machines fatally injured my uncle. The employer offered to pay to have the coffin taken to Poland. We, his family, offered to forget about the case. Back then, we assumed this was an acceptable deal. Perhaps it was because we retained some of the thought patterns that had served us well in the past. We held on to them until our operating system received an update.
For Eastern Europe, the 2004 accession to the EU was a long-awaited escape from the trap of history. It opened up cash flow for governments, freedom of movement and a vast job market for workers, and elite universities for overeager girls like me.
Others benefited even more. Between 2010 and 2016, Poland received 2.7% of GDP as EU transfers annually, and sent 4.7% as profits to Western investors. The gaps were even larger for the smaller countries: 2% to 7.5% for the Czech Republic and 4% to 7.2% for Hungary.
Starting in 2004, the economic cycles of Poland and Germany were closely aligned, as in a compatible but unequal marriage. This paid off during the 2008 financial crisis: Poland remained an island of growth in a sea of continental recession, largely because Germany, its main contractor, weathered the storm. Germany is almost as important to Poland as the next six trading partners combined. 28% of Poland’s exports go to Germany. Less than 6% of German exports go to Poland.
My private doubts about our deal. it didn’t germinate until the next decade, by which time I was a poster child for Western integration after a grand educational tour through Oxbridge, the Ivy League, and the grande école. It was 2014 and I was sitting in my best friend’s bedroom in Geneva, surrounded by human rights experts, when this upper-middle-class question popped into my head: why hadn’t we sued the owner of the organic farm back then? for such a preventable accident? This question heralded the rise of a new-found ego that saw the law as a legitimate tool in his playbook, and ahistorically flogged his past self for failing to consider what now seemed obvious.
Like my sense of entitlement, my country has changed beyond recognition. Poland has experienced uninterrupted growth for three decades, the longest in European history. Its GDP has nominally increased tenfold, six times when corrected for the cost of living. It has a record 3% unemployment rate, lower infant mortality than Canada, higher female life expectancy than the US, and less violent crime than the UK. And now you don’t get lost on Polish roads either.
The change is symbolized by, guess what, the automobile industry. It turned out that Eastern Europe didn’t have to be just the assembly line after all: it could do without Lego sets. Poland, and others, began to climb up the value chain. Our factories soon began to produce high-quality components on site instead of importing them from somewhere in Bavaria or Hesse. Poland began to export not only finished cars, but also engines, and then batteries of electric cars. The country’s organic progress in the supply chain gave rise to a question: if we have all the human and technical components for car production, why don’t we do it ourselves?
This question was a real-world illustration of what, according to theorists such as Joseph Schumpeter, happens in globalized capitalism when technological progress overtakes and destroys established industrial monopolies (such as those in Western Europe), turning them into dinosaurs and giving the newcomers (such as those from Eastern Europe) the chance to sneak in.
In 2004, joining the EU meant higher living standards, unprecedented economic growth and life opportunities. For years, it also meant accepting a built-in bias in rulemaking toward veterans: France and Germany.
The EU-funded highway system in Poland, for example, developed primarily the west-east axis, promoting German trade and North Sea ports, rather than the north-south axis that would propel Poland as a trade center for Eastern Europe together with its Baltic ports. When Poland became the leader in European road transport services, Germany pushed for common EU standards for truck drivers, which hurt the competitiveness of Polish transport companies, which employ half a million workers and represent the 6% of GDP. To many in Poland, the reform seemed like a selective application of rules in the service of the richest countries. But the balance of power is constantly shifting in ways some may find uncomfortable.
The last few years have been marked by political and economic ruptures in the Polish-German relationship. Politically, the feeling that Germany did not take Ukraine’s sovereignty seriously until its own Russian gas supply came under threat has caused angst across the region. What if one day they don’t take our sovereignty seriously either?
Economically, the surface current still resembles the old model of Polish outsourcing, relatively cheaper labor and a slow climb up the value chain. But it masks the hangovers of a new economic relationship in which Germany faces competition from its eastern backyard. A Polish-Finnish company recently launched pioneering satellites with cloud-penetrating technology. The US military has just purchased 10,000 Polish Manpad missiles (man-portable air defense systems) after they proved more effective than US Stingers. The Polish military obtained newly invented nanosatellites from a local company. Some Polish startups, such as molecular diagnostics companies, sell for hundreds of millions of dollars. And the Polish electric car Izera will hit the market in 2026 with plans to produce 60% of the components locally.
It is not surprising that, while doing so with velvet gloves, Germany uses its EU strength to try to prevent strategic investments in Polish infrastructure, such as new nuclear power plants, inland waterways and the development of a port of containers in Szczecin-Świnoujscie, an obvious competitive threat. to German ports.
At the global and local levels, economic cooperation based on a center-periphery division of labor is being questioned. As his assembly line grows in power, he begins creating his own Lego sets. The rivalry between China and the United States may soon be reflected in regional (and friendlier) thumbnails, like a Polish-German split. As Eastern Europe grows in power, its role in the pecking order is being questioned. The region has learned the hard way that if you’re not at the negotiating table, you’re on the menu.