Governments of countries undergoing a post-communist transition face the dilemma of balancing conflicting demands for greater economic efficiency (to achieve a successful transition to a market system) with demands for enhanced social protection (to legitimize regime change through a visible improvement in living standards which includes vulnerable groups). This paper analyses the transition in Bulgaria and Romania. Unlike other European countries, these countries did not embark on retrenchment policies until the mid- to late 1990s, so convergence with policies of spending constraint elsewhere in Europe was belated and partial. The social problems created by strict economic policies, exacerbated by a determination to reorganize the post-communist welfare states along the lines promoted by international organizations, are now being recognized. Post-communist governments in South-eastern Europe have belatedly started to address the social aspects of transition to democracy and the market. This probably reflects the process of regime change in Bulgaria and Romania, which has been characterized as a "two-step transition to democracy", with liberal governments only succeeding transformed communist elites in power after a protracted transition.
