Free market economy, western democracy loses support

The global financial crisis has significantly altered popular support for democratic and free-market principles across the 29 countries in central Europe and central Asia supported by the European Bank for Reconstruction and Development (EBRD), the development lender said in a report released on Tuesday.The report, based on a survey of some 39,000 people, showed support for democracy and the market economy waning in the more advanced economies of the EBRDs remit while less-developed economies among the Commonwealth of Independent States (CIS) showed a surprising upswing in commitment.The findings of the report suggest that markets and democracy lost support in the more advanced transition countries because they experienced deeper downturns in this crisis than in earlier recessions in the early and mid-1990s, the EBRD said.By comparison, the most recent crisis was generally milder in CIS countries than the output decline that followed the collapse of communism. Among the countries that displayed the highest levels of support for democracy are Turkey, Mongolia, Uzbekistan, Albania and Georgia. Armenia saw the biggest change in democracy support, levels among those surveyed.Conversely, backing for democracy dropped off sharply in Slovakia, Slovenia and Hungary. The crisis has provoked people to turn against what they had, the London-based lender said, with those living in more market-oriented and democratic societies less likely to choose democracy and free-markets over other systems because of the global economic downturn.The bank, formed after the Cold War to help ex-Communist countries make the transition to market economies, also noted that the less advanced economies in the former Soviet Union were among those most enthusiastic about democracy.This is especially true of crisis-hit people in the CIS countries who perceived a high degree of corruption. It may be that for those individuals, the crisis diminished any sympathy they may have had for state-led systems, it said.The EBRD said households in eastern and central Europe have been harder hit by the financial crisis than their peers inwestern Europe, as the former has less developed social safetynets to shield the population from the impact of job losses.Prior to the onset of the financial crisis in 2008, many consumers in eastern and central Europe had also taken out foreign-currency debt, that has left them exposed to the regions sharp currency depreciation.