By raising prices, Poland makes risky bid to help economy. Past increases sparked upheaval; so far this time, public is quiet
By raising prices of food and fuel this week, the Polish government is underlining the gravity of the country's economic problems - problems that an authoritative new study says also affect the rest of Eastern Europe. The price rises are risky. In the past, Polish government attempts to increase the prices of meat and other basic products have sparked political upheavals, including the famous 1980 strikes in the Baltic shipyards, which led to the creation of Solidarity, the now-banned independent trade union.Skip to next paragraph
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This time, a violent reaction looks unlikely. Although Lech Walesa, the leader of Solidarity, called for a ``major, determined protest'' and even the official trade unions denounced the action as ``unacceptable to the working people,'' no strikes were reported.
When this correspondent visited Poland in December, Solidarity leaders explained that workers are disillusioned. ``People are tired of tilting at windmills,'' said Jacek Kuron, a top union leader. ``They don't see how we can be successful.''
All the same, the government is proceeding with relative caution. Coal prices are jumping by 50 percent, public transport by 30 percent, gas prices by 25 percent, and average food prices 9.6 percent. These are significant increases, to be sure, but analysts say they are far short of what is necessary to bring supply into line with demand, and to end the rationing of meat and gas. Nation faces dilemma
In an interview last December, Deputy Finance Minister Andrzej Dorosz explained the government's dilemma. Price hikes would be limited in 1987 out of respect for ``social opinion,'' he said. But, he added, prices must be made more realistic if the country is to win new credits this year from the International Monetary Fund. These credits are seen as crucial if the country is to modernize its technological base and regain competitivity on world markets.
Other East European countries face a similar, if less extreme, dilemma. In a report issued this week by the European Community's economic commission, West European experts said that last year marked a turning point in efforts by the East European nations to put their economic houses in order.
For the first time since 1980, the region's debt toward the West increased. In 1985, it totalled $89 billion. By the end of last year, the experts said it had reached $117 billion. Region's poor trade balance
This increase in borrowing would be acceptable if accompanied by increased exports, but analysts say that East European trade balances with the West are deteriorating. Unless the trend is reversed, Western bankers will almost surely cut back on lending.
The obvious solution, the experts add, is for East European industries to boost sales to the West.
But to do this, the experts say, the East Europeans must make their economies more efficient.
A generally accepted prerequisite to greater efficiency is realistic prices for basic goods.
In this context, the Polish attempt to raise prices is important for the entire region. If Warsaw, with its volatile social problems, can reform its price mechanism, that will encourage other East Europeans to take similar steps. If it can't, other East Europeans are sure to be cautious.