Bankrolling Poland's 'renewal'

By , William E. Schaufele Jr., former US Ambassador to Poland, is president of the Foreign Policy Association.

Although the possibility of Soviet intervention in Poland cannot be entirely discounted, it appears likely that the leadership which comes out of the Polish party congress now underway will have a breathing space during which it will have to cope with the complex fall-out of the Polish "renewal," the organization of Polish society and, perhaps more immediately important, the crisis in the Polish economy.

The pace, complexity, and magnitude of political and social change in Poland have delayed the search for solutions to the massive economic problems which existed even before the process of change started -- an enormous $27 billion debt to the West, a serious drop in capital and consumer goods production, increasing shortages of basic consumer goods, especially food, the still unresolved housing problem, import restrictions owing to lack of foreign exchange, and a lackluster export performance, including the important extractive industries which traditionally generate a large proportion of Polish foreign exchange.

If the party congress is successfully concluded as now appears likely, Polish leaders will have to place the highest priority on economic problems. Recent news stories about the exodus of Polish refugees to the West should not obscure the fact that most will probably return once the uncertainties of the Polish "renewal" and of Soviet intentions are at least temporarily resolved and logical and realistic guidelines for the economy can be established.

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The three major centers of political influence -- the Roman Catholic Church, solidarity, and the party -- will have to reach a consensus on economic policy including a reasonable chance for it to work without serious disturbance, at least over the short run. More easily said than done, because nearly all observers agree that putting the Polish economy back on the track will require austerity and sacrifice for the Polish people. Solidarity, in its initial list of demands in August 1980, set the example by proposing meat rationing, in part as a means to assure equal treatment for all. The new Polish primate, Bishop Glemp, will have little time to conduct a policy review as he tries to fill the very large shoes of his predecessor, Cardinal Wyszynski.

Presumably the congress will adopt a resolution defining the general outline of economic reform, the centerpiece of which may well be an often discussed but never adopted decentralization policy. But the results of such a far-reaching change will not be felt immediately. Special exhortatory efforts by the party, the church, and Solidarity can probably raise production to some extent, but the structural, organizational, and systematic weaknesses which have caused low industrial productivity will not be resolved quickly.

However, if the Polish authorities successfully implement their stated intention to provide increased incentives and resources to Poland's overwhelmingly private agriculture sector, this year's harvest could be significantly improved over those of the past few years. In turn this would reduce dependence on foreign agricultural imports, $670 million from the US alone.

For the longer run, however, Poland will have to devise drastic new policies in planning, production, distribution, and marketing. But the West also has an important role to play. Western governments which have extended credits directly have granted a moratorium on that part of the Polish debt owed them and provided some food assistance. The Soviet Union has also agreed to a debt moratorium in addition to some direct assistance. However, Western banks which hold the majority of the Polish hard currency debt have yet to provided anything other than short-term debt relief. According to newspaper accounts, the West European banks are somewhat more amenable than are American banks to move quickly.

The banks will not have their debts repaid unless there is a basic change in Polish policy.But neither will they be repaid if they insist on payment as it becomes due. One element in any Polish economic program will necessarily be reassurances that rescheduling andm additional credits will be forthcoming, primarily to supply the spare parts and other materials necessary to achieve full production. Certain conditions will have to be set by mutual agreement and met by the Polish authorities. The details of arrangements to a certain extent await the outcome of the congress and the subsequent internal negotiations among Polish institutions to establish a new policy.

Although it is understandable that the bankers wish to await the results of the party congress and the negotiation of the conditions under which rescheduling would be granted, there seems little reason that they could not inform the Polish authorities of their willingness to do so when the necessary agreement is reached. The result would be an incentive to the Polish authorities to put their house in order and reasonable assurances that the Western creditors will eventually be repaid.

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