Riots and street battles are set to spread through Bulgaria, Romania and the Baltic states as inflation, unemployment and racism fuel tension, reports Jason Burke

Eastern Europe is heading for a violent "spring of discontent", according to experts in the region who fear that the global economic downturn is generating a dangerous popular backlash on the streets.

Hit increasingly hard by the financial crisis, countries such as Bulgaria, Romania and the Baltic states face deep political destabilisation and social strife, as well as an increase in racial tension.

Last week protesters were tear-gassed as they threw rocks at police outside parliament in Vilnius, capital of Lithuania, in a protest against an austerity package including tax rises and benefit cuts.

In Sofia, Bulgaria, 150 people were arrested and at least 30 injured in widespread violence. More than 100 were detained after street battles between security forces and demonstrators in the Latvian capital, Riga.

According to the most recent estimates, the economies of some eastern European countries, after posting double-digit growth for nearly a decade, will contract by up to 5% this year, with inflation peaking at more than 13%. Many fear Romania, which joined the European Union with Bulgaria in 2007, may be the next to suffer major breakdowns in public order.

"In a few months there will be people in the streets, that much is certain," said Luca Niculescu, a media executive in Bucharest. "Every day we hear about another factory shutting or moving overseas. There is a new government that has not shown itself too effective. We have got used to very high growth rates. It's an explosive cocktail."

Major Romanian companies threatening massive job cuts include low-cost car-maker Dacia, where up to 4,000 posts could go if sales do not recover. A spokeswoman for Renault, which owns Dacia, said such deep cuts would only be considered in a "catastrophic scenario", but production in Romania has already been halted for two months after local demand plunged by more than half. Other major companies have already announced plans to relocate, with one Japanese wire factory heading for Morocco.

Marius Oprea, security adviser to the last Romanian government, said the economic crisis would mean "serious problems for the middle class". He added: "There will be a fall in tax revenue which will lead to major problems for state budgets. The numbers of state employees will also be cut right back and their salaries will be worth less and less."

Another problem in Romania, as elsewhere in the region, is that many new middle-class house owners have taken out mortgages in euros. With local currencies collapsing, repayment is becoming harder.

"We will try dialogue but if that does not work we will defend our members' interest however we can," said one Romanian trade unionist last week. "We want to be part of the solution, not the problem, but the situation is very serious."

Dr Jonathan Eyal, a regional specialist at the Royal United Services Institute thinktank in London, said eastern European countries were ill-equipped to deal with the impact of the global downturn and risked "social meltdown".

"These are often fragile economies ... with brittle political structures, political parties that are not very well formed and weak institutions. They are ill-prepared for what has hit them," Eyal said. "Last year it was the core western European countries which were shaky; now it is the weaker periphery that are getting the full blast of the crisis."

The reasons for last week's unrest are varied. Bulgarian students were protesting over the death of one of their number in an apparently random criminal attack, blaming the Socialist-led government for failing to ensure security. They were joined by farmers angry at low prices for their produce and problems with EU subsidies often diverted by corrupt administrators.

Tensions have been exacerbated by the gas crisis, in which Bulgaria has suffered severe heating and power shortages since Moscow turned off the taps following a dispute with Ukraine.

"We are fed up with living in the poorest and most corrupt country," the Sofia protest organisers said in a statement. "This unique protest unites the people in their wish for change and their wish to live in a normal European country."

In Latvia, years of strong economic growth have given way to recession, soaring inflation and rising unemployment. Trust in the state's authority and officials has fallen catastrophically, said President Valdis Zatlers last week, threatening to call snap elections.

Most of those arrested in last week's disturbances in Riga have now been released. According to security police chief Janis Reiniks, the detained were "jobless, workers, students and school children" and included "one [person] connected to the Latvian Democratic Party and one skinhead".

Last year Latvia was forced to ask the International Monetary Fund for a £6.25bn bail-out package, fuelling a jingoistic backlash against a perceived "national humiliation".

Some eastern European states appear to be resisting better, however. The Estonian government built up substantial currency reserves during years of rapid growth. "Everyone knows this year is going to be very tough. But in Riga and Vilnius they are exhausted and angry and have lost faith in their leaders; that is not the case here," said Raimo Poom, political editor of Tallinn-based newspaper Esti Paevaleht.

One fear is a rise in attacks on ethnic minorities. The Czech Republic, also hit badly by the crisis, saw its worst street violence for years recently when 700 members of the far-right Workers' Party clashed with 1,000 riot police in the town of Litvinov whenthey were prevented from marching into a mostly Roma area. "The populist, nationalist political climate [in eastern Europe] is very conducive to anti-minority sentiment," said Larry Olomoofe of the European Roma Rights Centre in Budapest.

The recent history of the region aggravates the crisis, say experts. "You have people who were buoyed up through a very bad period after the collapse of the USSR, when their economies contracted by up to a third by a belief that joining the EU would bring them prosperity and stability," Eyal said.

"It is that aspiration that has been disappointed and that is very destabilising."

Europe's flashpoints

Bulgaria

Population 7 million. Troubled by corruption and political instability. Dozens of people, including 14 police, injured during riots in Sofia last week.

Latvia

Population 2.2 million. Centre-right government likely to call elections after riots over harsh conditions following IMF bail-out.

Lithuania

Population 3.5 million. Street clashes and 86 arrests after 7,000 people attended a Vilnius rally called by trade unions to protest at public sector pay cuts, reduced social security payments, an increase in VAT and an end to tax breaks on medicine and home heating.

Estonia

Population 1.4 million. So far calm, and government has more reserves of cash and public confidence than elsewhere, but a 3.5% contraction in the economy in the third quarter of last year is likely to cause problems. Support for the prime minister, Andrus Ansip, and his government is falling quickly.