The Fall of the Iron Curtain 30 Years Ago – The Beginning of a Success Story for Austria and Europe

By Martin Schreiber, RBI |

May/June marks the 30th anniversary of the fall of the Iron Curtain. The image that most impressively proves this turning point in European post-war history was taken on 27 June 1989 at the Austro-Hungarian border. It shows Foreign Ministers Alois Mock and Gyula Horn symbolically cutting through the border fortifications. Following the famous first words of Neil Armstrong on the lunar surface, one could say “A small step for two men, but a huge leap for the people of Europe”.

The Hungarian government’s decision not to renew or dismantle the border fortifications with Austria triggered a chain reaction with political, economic and social consequences that were unimaginable at the time. This benefited not only RZB, predecessor of Raiffeisen Bank International (RBI), which at that time had already been present in Hungary for more than two years with its own bank, but also countless other companies and with them the people and countries on both sides of the border once guarded by walls, mine belts and machine gun towers.

The political and social upheavals that followed in the years after 1989 led to an overall rapid political transformation process in the eastern part of the continent, the results of which, similar to the economic development, were not foreseeable at the time. Who would have thought that only 15 years later, on 1 May 2004, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia (together with Malta and Cyprus) would join the EU? Probably very few of us would have included this event, at least as a distant goal, in their vision of a united Europe.

We asked prominent contemporary witnesses, who had this vision in one way or another, about their memories of the opening of the East and about their view of the resulting developments.

Heinz Fischer

© Pertramer

On the evening of 2 May 1989 – a Tuesday – I was invited to a reception on the occasion of the 80th birthday of former ÖVP (the austrian conservative people’s party, ed. note) Foreign Minister Karl Gruber. There was only one topic, namely the decision of the Hungarian government to start dismantling the Iron Curtain at certain sections of the border between Hungary and Austria. The next day I had a conversation with Erhard Busek and we discussed this topic intensively and in a positive mood. I decided to call my friend the Hungarian Foreign Minister Gyula Horn, who had visited me regularly in Vienna even before his time as Foreign Minister and asked him for further information. What he told me sounded very promising.

Exactly eight weeks later, on 27 June, Foreign Minister Alois Mock met Gyula Horn at the Austrian-Hungarian border to cut through the Iron Curtain in the presence of witnesses and photographers: An event that brought along very much trust, hope, courage and symbolism. The next weeks until the fall of the Berlin Wall on 9 November sometimes seemed like a beautiful dream to me. Today, I still think often and gratefully of the people who acted so courageously and future-oriented at that time. For me, this was probably the most beautiful phase of European politics since the end of the Second World War.

It is all the more sad and disappointing how today the legacy of the pioneers of 1989 is being abused and the values to which they were committed are treated with contempt. We are facing difficult times should nothing change in this respect and egotistic nationalism – to the detriment of humanness and dignity of man – should continue to spread and divide Europe as well as our society.

Heinz Fischer, born 1938 in Graz, was a member of the Austrian Parliament from 1971 to 2004 representing the Vienna electoral district, President of the Parliament from 1990 to 2002, President of the Republic of Austria from 2004 to 2016 and Deputy Chairman of the Party of European Socialists from 1995 to 2004.

Wolfgang Schüssel

The fall of the Iron Curtain took place in several stages. The Central Committee of the Hungarian Communist Party already decided in February, I believe, not to renew the fence because they had no more money – to import the material from the West. The then Prime Minister Miklós Németh also discussed this with Mikhail Gorbachev, who had nothing against it and thus gave the green light. Németh told me that himself. At a press conference in early May, it was announced that the fence would be dismantled, but at that time there was practically no media response. The photo of Foreign Ministers Horn and Mock cutting through the fence, which then went around the world on 27 June 1989, was, of course, only a symbolic gesture for a process that had long been underway, but which practically no one had yet understood. It came about spontaneously during Gyula Horn’s visit to Austria and decisively accelerated the course of events.

On 24 April 1989 I joined the government as Minister for Economic Affairs and witnessed this development at first hand. Just like the beginning of another fateful development, namely Austria’s accession to the EU. At the beginning of July, we submitted the application for accession, and so this incredible double opportunity became a reality for Austria – the fall of the Iron Curtain and the prospect of EU accession. There was no script for that. This was an incredibly fascinating time, in which a new spirit of optimism was noticeable in the government and in the whole country, for me it was very touching and moving. This short time determined my whole further political life, and I was fortunate to be able to actively participate in the further developments. Austria joined the EU in 1995, and during our first presidency in 1998 we began accession negotiations with Poland, Estonia, Hungary, the Czech Republic and Slovenia.

The fall of the Iron Curtain was the starting signal for the reunification of Europe. Pope John Paul II put it very well: “Europe must breathe with both parts of the lung, the western and the eastern”. That became possible at that time and this historic opportunity still accompanies us today. It was the first time since 1945 that a seemingly immovable border crumbled, and Europe was thus able to realize itself in a completely new form and vision.

Wolfgang Schüssel (born 1945 in Vienna) is a former Austrian politician. From 1989, he was a member of the Austrian federal government and from 1995 to 2007, he was head of the ÖVP (the austrian conservative people’s party). From February 2000 to January 2007, Schüssel was Federal Chancellor and as such Chairman of the European Council in the first half of 2006.

Erhard Busek

© Manca Juvan

Europe regained!

Through my long involvement on the other side of the Iron Curtain, where I have tried to assist various groups regarding democracy and commitment, the fall of the Iron Curtain and its subsequent changes have been crucial to me. To be honest, I wasn’t expecting it! All the more, I was happy because from my family history I had a very superficial and modest knowledge of what these parts of Eastern Central Europe, for example, meant for Austria. I never concurred with Francis Fukuyama in saying that this was the end of history, but it was a tremendous opportunity for Europe!

This initially went quite well and ultimately led to the enlargement of the EU to include the countries of Central and Eastern Europe. So much for my positive statement and also for the gratitude towards all those who have committed themselves in this respect. Not only in politics, but also in business and the social sphere – Herbert Stepic is one of them.

More critically, however, I see what has happened or not happened recently. We did not really welcome these “new” old Europeans, there was a certain arrogance and also a lack of commitment towards community. That is why we are stuck in today’s difficulties and cannot decide to develop an overall European strategy. One must also add that it is not just about those countries that have long been promised membership of the European Union in some way, but also about those countries where we are not even ready to think about it, such as Ukraine, Moldova or Russia.

Europe is therefore not complete, but actually just at the beginning. The question that concerns me is to what extent we have failed and what can be done to get this process going again. If Europe wants to survive, it goes without saying that we must think of the whole of Europe, because it is just a small part of our great global world, where every single European and every strip of land is needed. Fiat Europe! (Let there be europe!)

Erhard Busek (born 1941 in Vienna) was Minister of Science and Research, Minister of Education, Vice-Chancellor of the Republic of Austria, Special Coordinator of the Austrian Government for EU Enlargement, Special Coordinator of the Stability Pact for Southeastern Europe, President of the European Forum Alpbach, Rector of the Salzburg University of Applied Sciences and Chairman of the University Council of the Medical University of Vienna. He is currently, among other positions, Chairman of the Institute for the Danube Region and Central Europe.

Paul Lendvai

© Thomas Ramstorfer

I experienced the fall of the Iron Curtain in several capacities: as a native Hungarian, as a political refugee in Austria, as an Austrian and international commentator on Hungary and the Eastern Bloc, and last but not least as a passionate new Austrian.

Even during the time of the Iron Curtain, I regularly travelled by car, train or plane to Budapest to report on the changes of the communist regime. A country with a tragic and at the same time heroic history, with brilliant individual achievements and repeated collective failure of the political elite. The Iron Curtain fell not thanks to the Hungarians, but primarily thanks to the change of scene in Moscow and Mikhail Gorbachev’s suicidal reform policy.

It is part of the irony of Hungarian history that, in retrospect, this event is appreciated more by Western observers than by the Hungarians themselves, who either do not understand the enormous significance and consequences of the fall of the Iron Curtain or convert it into political small change at their discretion.

The year of remembrance is a good opportunity to remind not only ourselves but also our Hungarian neighbors of the past. That is why any flirting with the aggressive Russia of Vladimir Putin, whether for political or financial reasons, is a betrayal of the ideas of liberating Eastern Europe from the foreign yoke.

Paul Lendvai, Austrian citizen since 1959, is editor-in-chief of the “Europäische Rundschau”, columnist at the daily “Standard” and head of the discussion program “Europastudio” of the Austrian national broadcaster ORF. His latest book, translated into several foreign languages, was “Orban’s Hungary” (2016).

Karel Schwarzenberg

I have learned of the cutting of the barbed wire fence by Foreign Ministers Mock and Gyula Horn from the media. The scene was fascinating for me in its great symbolic power, and I can well remember how happy I was that the border to the East finally opened up. Because of my work for the Helsinki Federation for Human Rights, I was able to recognize or at least guess that the star of the then Soviet Union was sinking. In the other countries of the region, too, the process of change was more or less at an advanced stage. In Poland more, in Czechoslovakia and the German Democratic Republic, still blocked by Russia, less. However, the opening of the Hungarian border ultimately led to the collapse of the East German regime.

Looking back on this day I am first of all very happy and satisfied with the subsequent liberation of the eastern part of Europe and the unification with the western countries of the continent, in part already as a member of the EU. It goes without saying, however, that it will take decades for the social and economic differences between the countries that have been free since 1945 and those that joined after 1989 to converge. A lot of patience is still needed in this respect, but it is not always available in sufficient measure. And when I hear that the people from the former Eastern bloc are “completely different”, I answer that at the time we only watched the slavery going on at our neighbors by and large inactively. More than 40 years of freedom here and subjugation there characterize the people.

The successive admission of our eastern neighbors into the EU, made possible by the fall of the Iron Curtain, not only contributed to peaceful coexistence but also contributed significantly to economic development – not only in the east but also in the “old” countries of the EU with significantly higher economic growth rates. Austria has particularly benefited in this regard. In the long term, however, we must decide whether we only want a “Western Europe” or a truly united Europe. I am decidedly in favor of the latter, and that also means welcoming the countries of the Western Balkans as soon as possible.

The EU is constantly evolving, but it is far from complete. What it urgently needs today would be reforming the really important core issues such as foreign, security or defense policy. These are still dealt with at the national level, while it is decided in Brussels whether the delicious product from the Wachau apricots may or may not be called “Marmelade”. This is ridiculous! We must give the EU the basic competences, and in return other competences can remain in the countries or be transferred back to them.

Karel Schwarzenberg (born 1937 in Prague) became involved in human rights at an international level at an early age. Among others, he was President of the International Helsinki Federation for Human Rights from 1984 to 1991. After the Velvet Revolution in what was then Czechoslovakia and the election of Václav Havel as President of the Republic, Schwarzenberg served as his office manager with the title of Chancellor from 1990 to 1992. From 2007 to 2009 and from 2010 to 2013, Schwarzenberg was Foreign Minister of the Czech Republic. He is one of the most popular Czech politicians.

Herbert Stepic

© Kurt Kainrath

The fall of the Iron Curtain came completely unexpected for me, although – or perhaps better – because I have been active in the region for decades.

The step was an opportunity for Austria and Europe and a galactic window for RBI’s predecessor RZB to jump into a new dimension. Due to our success with Unicbank in Hungary (now Raiffeisen Bank, founded in 1986 together with the International Finance Corporation, among others), RZB’s shareholders accepted the initial concept for the Eastern expansion in autumn 1989 – much to my surprise. What followed was a feat of strength on the part of an incredibly motivated team, which in some years built up two banks as equity preserving “greenfield investments” (i.e. setting up the business from scratch). This was in complete contrast to the competition, which, because it appeared only much later on the stage, almost exclusively took over existing banks, in some cases completely overpriced.

It would have been impossible to bring Eastern Europe closer to a free market economy in a rapid transformation process without the massive efforts of Western and above all Austrian banks! But when it became “tight” in 2008/2009, we were criticized by poorly informed opinion makers who forgot that there had been neither liquidity nor a capital market to build up the Eastern economies after 50 years of communism. However, it was not only about capital transfer, but above all about know-how, new products and distribution systems and last but not least about modern technologies and business philosophies.

The years up to 2008 went down in the annals as a boom period, both in the region and in RZB/RI/RBI. The highest returns on equity were achieved in CEE (up to about 20 per cent p.a. in RI), with annual economic growth rates of 4 to 6 per cent and credit growth rates of 15 per cent or more. Without the “borderless” commitment of thousands of highly motivated specialists in Vienna and the network banks, RBI would not be what it is today: a factor in CEE and an internationally respected bank. For this commitment and success, I would like to thank all the colleagues involved at the time!

The transformation process was not least determined by foreign direct investment, which was decisive for the social, economic and political development of the individual countries. And it brought membership in the EU as a “carrot” to many countries. Unfortunately, however, the EU has lost its shine today. One country says goodbye, and the weakness of the institutions leads to nationalism, which is cleverly used by populists. However, the transformation process is far from over. All those responsible should remember the strengths of commonality – which is, by the way, an inherent Raiffeisen principle – since it is ultimately a matter of the well-being of all of us. Only a united Europe will be able to survive as a business location in global competition!

Herbert Stepic had been a member of the Managing Board of Raiffeisen Zentralbank since 1987 and in this function, as before and after, was the driving force behind Raiffeisen’s eastward expansion. He was Deputy CEO of RZB, CEO of Raiffeisen International (IPO 2005) and CEO of RBI from 2010 to 2013 following its merger with RZB’s main business areas. He achieved one of his greatest successes outside the bank during the financial crisis, when he persuaded the major Western banks and the local central banks to maintain their refinancing lines in CEE unchanged and to provide the markets with sufficient liquidity, respectively. These talks led to the founding of the “Vienna Initiative”, which serves to exchange information between the regulators from East and West still today.

Karl Sevelda

© David Sailer

In 1989, as Head of Financing at Creditanstalt, I had travelled extensively to the former “Eastern Bloc”. After each of these trips I was depressed by the backwardness of these countries. However, in the months before the fall of the Iron Curtain, it was already clear that changes were coming: Perestroika and glasnost in Russia, “goulash communism” in Hungary or the “round table” in Poland: The communist establishment attempted to prevent the imminent loss of power by introducing market-economy elements and granting certain ways of political participation.

But the system was untenable! It had failed to meet the needs of its population in every respect and was therefore rejected by its citizens. Like many others, I felt great joy and satisfaction: Social market economy and liberal democracy had splendidly proved their superiority!

When I look back today, however, I am overcome with great concern: it seems that some governments of former communist states are orienting themselves towards the authoritarian structures of the past and taking pleasure in them. Corruption, which was common under communist dictatorship, also continues to exist. Moreover, many of these countries, which are among the big recipients of EU subsidies and whose economies have benefited enormously from EU accession, are harshly criticizing oh so bureaucratic Brussels! But memory and experience, let alone gratitude, are not political categories – but forgetfulness is…

If we want to maintain and even strengthen our economically strong and liberal-democratic Europe, our friends in Eastern Europe should take as their model great men like Vaclav Havel, Lech Walesa or Gyula Horn who “tore down” the Iron Curtain, and not those nationalistic and authoritarian politicians who currently want to rebuild walls!

Karl Sevelda began his professional career in 1977 at Creditanstalt-Bankverein. In 1998, he moved to the RZB Managing Board, where he was responsible for corporate customer business. Deputy CEO of RBI between 2010 and 2013 and then CEO until the merger in 2017.

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