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Two rounds of EU eastern enlargement will pose difficult economic and political adjustment problems. Based on recent analysis one also finds many opportunities for both the EU-15 and the accession countries which, however, face the negative spillovers from the Russian transition crisis. The transformation crisis in Russia is analyzed in its own right and explained via the interplay of domestic reform failure and inadequate external transformation support - including an ill-guided transition approach of the IMF. Based on a broad analysis the ingredients of a successful transformation strategy are identified. Creating prosperity and stability in the whole of Europe is the true challenge of 2000+.