This paper deals with the increasing interaction of economic and environmental issues in Eastern Europe. The paper starts with a discussion of environmental problems in these formerly centrally planned economies. The grave environmental problems these countries face are surveyed and an explanation is provided in terms of the nature of the communist system. While a solution must be sought in an international cooperation context, involving the developed West European countries, many emerging international cooperation schemes inspired by environmental economic theory are no longer effective in the light of the disastrous loss of competitiveness of East European industries. New initiatives on the part of West European countries seem to be called for.