Transition has not been without hardship. Many people found themselves worse off than before and without the safety net of social provision. Nor does privatisation necessarily create a free market. Transferring ownership into the private hands of former managers and officials or to foreign companies does not necessarily mean more efficiency and competition. In basic sectors such as utilities and raw materials they continue to operate as monopolies under government protection.

Financial and banking systems were re-established on commercial lines. Stock exchanges were opened. Steps were taken to reform the legal system, including commercial law, tax, land ownership and intellectual property. Foreign trade legislation was liberalized and investment laws created to facilitate foreign investment. The currencies are now linked to the Euro. The institutional reform process is not yet complete. Property rights are often disputed, financial statements are not always what they seem, and an essential requirement for any business, however small, is an experienced bookkeeper who can navigate the complexities of bureaucracy. Land acquisition is complicated by the policy of reparation for property expropriated by the USSR. Certifying that there are no prior claims is not straightforward.

All this created severe demands on a limited pool of expertise. In the early days it was striking how young the policy makers and technocrats were. Unless they were returning emigrants, people over thirty did not have the necessary education or background. It also created social stress. The privatisation process was not transparent and often corrupt as managers and politicians manipulated the process to their advantage. It is ill-mannered to ask owners how they acquired their business or otherwise refer to the murky period of spontaneous privatisation. Social benefits were considerably reduced, unemployment rose steeply and the standard of living of most of the population fell sharply. In contrast the minority who saw the opportunities of the free market to set up new businesses or who were sufficiently well qualified to be employed by foreign companies did well. Enthusiasm for the free market encouraged many new ventures and the expansion of privatized companies. In some cases naivete and well-intentioned but incompetent management led the new companies into failure.

The widening gaps of income and expectation, the novelty of a money-based economy and constant change and fluidity of institutions and systems created an environment that encouraged a ‘shadow market’ estimated at around the equivalent of 25% of the official economy in Lithuania and 20% in Estonia and Latvia. It also encouraged organized crime and routine corruption.

Hard information is a scarce and valuable commodity to be hoarded and traded. Gossip, rumour and conspiracy theories flourish. There is often the suspicion that other people hold things back, are not telling the whole story and that even the most open and clear proposal conceals an ulterior purpose.

The defence mechanisms that have preserved the identity and pride of peoples subject for centuries to occupation and oppression cannot be expected to disappear overnight when meeting foreigners of good will. While they have an acute sense of fifty misspent years they deeply resent being patronized by Westerners. There is an assumption that greater powers are out for what they can get, whether they are Russian, German or American. A culture of resilient self-belief, with an accompanying scepticism and obstructionism served them well in the past. Sooner or later foreigners encounter the ‘it will never work here, we are different’ attitude against which patience and perseverance are the best devices.