In the former Eastern bloc, a hazardous transition: what should the state do in a region where poverty is making a horrific comeback?(A New Deal for the Poor, part 2)(Former Soviet Union)

In 1960, the 20% of world population living in the richest countries had 30 times the income of the poorest 20% - by 1995 theft income was 82 times as much.

In the former Eastern bloc, strong central government virtually wiped out poverty through wealth redistribution mechanisms. But as the region undergoes political transition, the state is no longer up to the task, and poverty is making a horrific comeback. Even the former middle classes now rank among the impoverished.

In the vast, ethnically diverse Former Soviet Union (FSU) and Eastern Europe, the breakdown of central planning and in many cases, the absence of effective state institutions to cushion the jolt, have led to the most acute poverty and welfare reversals in the world.

Based on a daily four dollar benchmark - considered the minimum required to survive - the number of poor increased by over 150 million in seven years, a figure greater than the total combined population of France, the United Kingdom, the Netherlands and Scandinavia. Since the 1998 financial crisis in Russia, the ranks of the poor are estimated to have swelled by a further 20 million. What's more, in this decade dollar-a-day poverty has made a comeback: in Romania and Bulgaria, five per cent of the population …