Senator Brock: Move Carefully on Aid to Poland
FORMER Senator Bill Brock likes to recount a recent lunch he had in Warsaw that illustrates one aspect of Poland's mangled economy. The total tab for a group of six - including taxi fares and some small gifts bought along the way - was the equivalent of $3.50.Skip to next paragraph
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``The (Polish) currency has no value,'' says Mr. Brock, adding that there's very little to buy in the shops anyway. Dinner at one of Warsaw's ritziest hotels, he says, figured at the unofficial ``street corner'' exchange rate, cost him 96 cents.
But unrealistic prices are only a symptom of deeper problems.
Poland is saddled with a $39 billion foreign debt, a system of hopelessly inefficient state enterprises, and a population rattled by constant consumer shortages and slumping living standards.
Now come the reformers - a new government headed for the first time by a noncommunist prime minister, Tadeusz Mazowiecki - but it's clear they won't be able to succeed without outside help. The Poles have appealed for United States aid. And in July, President Bush offered an assistance package worth about $100 million. That disappointed some Poles, including Lech Walesa, the Solidarity trade union leader, who had pushed for $10 billion.
Brock, like many other Western analysts, says the West needs to move carefully in offering economic aid to Poland and other reform-minded governments in Eastern Europe.
``Big money may not help at all,'' says the former US trade representative. ``It may even make it worse.'' Large government loans, he explains, could be used to prop up Poland's inefficient state enterprises - and ultimately slow the pace of economic reform. Some analysts contend this already happened once. During a wave of economic reforms in the early '80s, the West poured billions of dollars into Poland. But very little went toward making fundamental changes in the structure of the economy.
This time, says Brock, the West should make sure infusions of capital go directly toward helping establish small-scale enterprises.
``The answer is in the small things,'' says Brock, who recently returned from visits to both Poland and Hungary. This means, for instance, setting up programs to train managers in Western marketing and management techniques. Brock says he spoke to union leaders in Hungary who pleaded to have AFL-CIO documents translated into Hungarian - just so they could learn how to organize and negotiate.
Private corporations also need to play a bigger role in the East's economic development, says Brock.
Many West European companies, especially the West Germans, are moving to invest in the East - but the total amount of investment is still low. One major barrier, say experts, is the difficulty in transferring profits earned in nonconvertible Eastern currencies back to Western corporations. Business leaders are also concerned that they could loose their investment if there were a sudden shift in government.
``I don't think American firms need to be pushed'' to invest in the East, says Brock. But he contends that much of the hesitation on the part of US businessmen is unfounded. The Overseas Private Investment Corporation insures foreign investments against loses resulting from political disturbances. ``If US companies just knew about this,'' he says, ``it would resolve a lot of the concern.''
Brock also favors establishing a program to boost US trade with the region, similar to the Caribbean Basin Initiative of 1982. Under such an arrangement, the US would grant Eastern Europeans favored access to US markets - as is already done for many developing countries. ``We might consider something like that - but only for those who've made irrevocable moves toward political freedom,'' says Brock.