According to the EBRD's Chief Economist, East European states are among the last in line for economic recovery. He believes it is vital the West spread its aid East.
Erik Berglof believes Western European governments should spend even more in their stimulus packages than the United States' $3.6 trillion.
“Right now, what is most important is that the money being made available to the banks in Western Europe is not constrained in terms of being able to use this money in Eastern Europe.
It's sensitive for Austrian politicians to use money from Austrian taxpayers to support banks in Romania for example, but it's very important that these kind of constraints are not imposed. Because they will lead to constraints in East European countries. They will start saying “we will not allow you to transfer profits back to your parent banks.” This will start protectionist warfare.”
What will be the sign in the real economy that the world has turned the corner?
“It's way too early. The most hopeful signs are that it will turn at the end of this year. But frankly for this part of the world, we will have to wait some time yet.”
Leading economies like the US and UK have gone for big stimulus packages, others like Germany and France – smaller packages. Which approach do you support?
“Right now the important thing is to do as much as you can, the US is approaching that level. We will just have to hope, that this will be enough.”