Props for Poland: where East and West meet
Boston — The Polish crisis has produced an odd situation: The Soviet Union and its fellow members in the Warsaw Pact will join in an unacknowledged partnership with the West to prop up Poland economically.
In other words, the United States and its Western European allies in NATO will be helping financially a military opponent. The Soviet Union, which stopped Poland from receiving Marshall Plan aid after World War II, will quietly welcome any assistance that the West now chooses to provide its economically troubled ally.
Why the policy switch?
Because the Soviets cannot afford to ac" cept the economic burden of Poland. In fact, Dr. William Scully, an analyst with the Heritage Foundation, figures that one of the key reasons the Soviets have not invaded Poland is its concern over the economic hassle involved. The armies of the Soviet Union, East Germany , and Czeckoslovakia could soon overwhelm any Polish military resistance. But these armies would then occupy a dispirited nation, perhaps disturbed by underground resistance, work stoppages, and declining productivity. "The Soviets have enough problems of their own," Dr. Scully said in a telephone interview.
The Polish economy already suffers from what he has termed "economic devastation." The recent strikes an reductions in work hours have not helped. Industrial production is running 10 percent below year-ago levels. Export earnings are down by one-third. Strike settlements raised wages without lifting production, thus resulting in double-digit inflation.
Both Lech Walesa, the head of Solidarity, the independent trade union movement, and the new prime minister, Gen. Wojciech Jaruzelski, are aware of the need for increased productivity and have called a 90-day cooling-off period, in which strikes are supposed to be forbidden.
Dr. Scully maintains that something more like a four- or five-year cooling-off period would be required to effect the necessary economic reforms. But he is not hopeful that these will be managed sufficiently enthusiastically by the government to succeed.
If the experiment fails, the Soviets will be waiting in the wings to reassert their authority.
The motives of East and West differ in their wish to help Poland. The Soviets apparently hope that the Polish Communist Party can gradually take full control of the situation again as the shape of the economy improves. The West would like to see a somewhat more independent Poland with a freer economy adapting some of the techniques of capitalism. That would be a moral victory, although no one believes Poland is able to leave the Warsaw Pact.
Dr. Scully, together with a prominent Eastern European economist who wished to remain anonymous, prepared a study for the Heritage Foundation which examines in some detail the history of the failure of economic management in Poland. They argue that the workers' revolt was the inevitable consequence of the disastrous economic courses pursued by the ousted regime of party leader Edward Gierek and Premier Piotr Jaroszewicz.
This government had attempted to modernize the Polish economy in the 1970s with an intense drive for investment, importing new technology and equipment from the West, and financing it with Western credits that today total about $25 billion. This ambitious program was derailed by recession in the West, shrinking the market for Polish exports; soaring international prices for commodities, especially oil; ideologically rigid economic policies that hurt the important private sector in agriculture and exacerbated shortages of foodstuffs and consumer goods; and a boost in worker incomes just as shortages were developing.
The study finds the best prospect for reform of the Polish economy lies in the recommendations of a "Commission for Economic Reform" established by then-Prime Minister Josef Pinkowski in last September. The commission's proposals were twofold:
* The "freeing of Polish enterprises from the intricate system of central direction of the last 36 years, thus permitting them to function on the principles of economic profits an free-market forces." This would be similar to the Hungarian model known as the New Economic Mechanism.
* The development of "self-management" by workers' councils within the enterprises (state companies), along the lines of the system prevailing in Yugoslavia.
"If such a reform, based as it is on an 'intermarriage' between the Hungarian and Yugoslav models, were to materialize, it would constitute the most embracing economic reform ever attempted in communist-dominated eastern Europe," the study notes.
The new government of Prime Minister Jaruzelski seems serious in its efforts to act quickly on these reforms. But the government will need to reschedule its foreign debt. It cannot afford to pay perhaps $7 billion a year on that debt and grant workers some improvements in their living standards at the same time. Here is where the West will likely come to the rescue.
Another obstacle, Dr. Scully says, is the ideological rigidity inherent in a communist system, reinforced in this case by pressure from the Soviet Union.
He concludes: "Despite all the difficulties facing Poland, her economic problems are still manageable and potentially solvable, provided the government is willing and able to modernize in the most effective way all the internal resources and talents of the people."
Curiously, both East and West want Poland to s ucceed.