Out-liberalizing the EU: pension privatization in Central and Eastern Europe

Abstract

The pension privatization trend that swept Central and Eastern Europe (CEE) between 1998 and 2004 presents a conundrum when viewed from the perspective of European Union (EU) enlargement. While these reforms took place at around the same time as EU accession, the EU did not use its formidable membership conditionality to impose them on CEE accession states. This article reviews the major causal explanations for pension privatization in CEE and finds that a critical factor was the transnational policy campaign launched by the World Bank and allied organizations in the mid-1990s. Pension privatization appealed to CEE accession states because it was significantly more ‘liberal’ than EU social policy norms. Pension privatization enabled CEE liberals to out-liberalize the EU in an effort to further a low-wage, low-cost development strategy and attempt to exert leadership in EU economic policy-making.