Why Poland went bankrupt

The present-day catastrophic economic situation in Poland is a complex, multifaceted phenomenon caused by many factors. Until recently the emphasis was placed on Gierek's ill-conceived policy of break-neck tempo industrialization; gross neglect of agriculture, especially its private sector; and the economic recession in the West, which undermined Poland's ability to sell its manufactured goods in the capitalistic markets.

Were these factors, however, enough to bring to the brink of economic disaster and outright starvation a country still employing over one-fourth of its population in the countryside and producing in large quantities such natural raw material as coal, copper and sulfur -- the only country in Europe, next to Norway, which has a potential surplus of energy?

In order to make the riddle of Poland's economic near-collapse more understandable, one must add two other vital aspects, namely the changing nature of the country's trade with the USSR, and the problem of foreign aid to other Communist or pro-Soviet countries.

Since the August-September 1980 upheaval, an avalanche of articles and statistical data has been published, not only in the dissident publications but also in some official ones. Consequently, the real meaning of the ''fraternal aid'' of the Soviet Union to Poland has undergone a searching analysis by some of the country's leading economic experts. The picture that has emerged may be summarized as follows.

Until his downfall in 1970, Gierek's predecessor, Gomulka, whatever his other shortcomings and mistakes, insisted on Polish-Soviet trade relations being based on the principle of clearing and balance. Although he did occasionally succumb to the mounting Soviet pressure, on the whole during the 1950s and early 1960s he successfully resisted too close an economic integration of the two economies. During the late 1960s, in the name of ''proletarian internationalism'' he agreed to supply a considerable amount of both military and economic aid to Cuba, Vietnam, and India, on terms which amounted to outright gifts. This ''fraternal aid'' damaged the Polish economy greatly, resulted in the Baltic Sea coast riots , and thus eventually contributed to Gomulka's downfall in December 1970.

Gomulka's successor, Gierek, did not learn Gomulka's lesson properly and was accommodating toward Russian demands from the start. Taking advantage of Gierek's precarious domestic situation and encouraged by his demonstrative servility, Moscow kept increasing its pressure on the Polish party to speed up the integrative economic process of the Soviet camp, as represented by the Council of Economic Mutual Assistance (Comecon). The first symptoms of Poland's surrender were already visible at the 25th session of Comecon in Budapest in 1971. Poland's delegation abandoned Gomulka's previous stiff opposition to close economic integration of the Soviet camp, an opposition shared by Romania and Hungary.

During the years 1971-1975, Poland signed a series of new, often long-term agreements with the USSR that committed Warsaw to a series of joint projects through 1990. Some of them involved Polish industries in such close cooperation that they amounted to virtual mergers - such as the merger of the Kharkov Engine Company with its counterpart in Odessa. Polish capital and labor were to be invested in various costly and far-reaching projects in some distant parts of the Soviet Union; for example, the exploitation of asbestos mines and natural gas in Siberia. Poland's aid to ''national liberation movements'' in Angola, Ethiopia, Ghana, and Vietnam was greatly expanded, with Warsaw footing enormous bills, or delivering large amounts of military hardware, consumer goods and factories goods on long-term credit often up to 50 or 60 years.

Morover, Poland delivered to the USSR an increased quantity of sophisticated industrial products, like ships, railway engines, and computers, receiving compensation only in nonconvertible ''transferable rubles.'' Meantime it had to import various vital goods from the West, paying for them in hard currency.

These agreements, signed by then Prime Minister Jaroszewicz, encountered considerable opposition from Poland's economic experts, who criticized it as disadvantageous and even ruinous to the country. The opposition in Warsaw lingered for some five years, until 1975. That year Soviet Prime Minister Alexei Kosygin visited Warsaw, sharply remonstrated against the alleged ''sabotage'' of the 1970 agreement by Poland, and threatened Soviet reprisals.

Gierek and Jaroszewicz surrendered immediately. Most of the recalcitrant experts were censored, demoted, or dismissed. From then on the last obstacles to the ''dynamic increase of the fraternal economic cooperation,'' as the official propaganda described the agreements, was removed. Between 1976 and 1980, while the industrial production of Poland increased by some five percent per year, trade with the USSR expanded by over 22 percent per year; under Gomulka, prior to 1970, it grew some seven to eight percent per year.

After 1970 Polish deliveries of ships to the Soviet Union greatly increased. By then more than one-third of the Soviet merchant marine came from the shipyards in Gdansk, Gdynia, or Szczecin. Out of 60,000 hydraulic brakes produced by the Praszka factory over 50,000 were bought by the USSR. Some 60 percent of the railway engines of the Cegielski factory in Poznan were sent eastward. Out of 130,000 railway carriages, some 90,000 went in the same direction, while at the same time, Polish railways suffered from a critical shortage of both items.

Over 60 percent of Poland's computer production since 1975 has landed in the offices and factories east of the border; the same is the case for housing construction machinery, while an average Polish family has to wait for a new apartment from 9 to 11 years. At the same time the USSR has become the largest recipient not only of Polish aircraft engines, but also of telephones (over 5 million sets were delivered in five years!), while they are almost unobtainable at home. In Poland, an average waiting time for a telephone amounts to three or four years. The same is true of a great deal of food, many drugs and pharmaceutical products, clothing, shoes, and various electronic items.

Since many of these items were manufactured with raw materials, equipment and certain more sophisticated segments imported for hard currency from the West, and repaid in ''transferable rubles,'' Poland has been increasingly on the losing side of the deal. As the Soviet market is a bottomless pit, the Polish economy has been bled white by trying to fulfill its part of the deal. The larger the turnover, the larger the loss. A considerable share of the Polish loans obtained from some 480 Western banks has its origin in the nature of Polish-Soviet trade.

Why did Gierek and Jaroszewicz agree to the deals that have proven so disastrous? To answer this query, one has to bear in mind not only the fact of Poland's far-reaching dependence on Soviet raw materials (oil, iron ore, cotton, etc.), but also the political dependence of the ruling party on its protecting power. Lacking legitimacy at home, the Polish party leaders, ever since Stalin, have been performing a balancing act between the domestic pressures and the demands of their Moscow sponsors. The party tried to bribe Poles by hastily offering them a pittance of consumer goods, partly imported from abroad and to appease Big Brother by all sorts of far-reaching concessions. While Gomulka had tried to limit these concessions to what he regarded as a necessary minimum, the more supine and spineless Gierek and Jaroszewicz went whole hog in their servility to Moscow.

Poland's near bankruptcy is a result of the unconditional surrender of the Polish party and governmental leaders to the insatiable demands of their greedy and short-sighted Soviet sponsors. While denouncing ''Western colonialism,'' they have created a new type of neocolonialism in their own hegemonic sphere of interest, which is actually the last surviving colonial empire of our day.

You've read  of  free articles. Subscribe to continue.
QR Code to Why Poland went bankrupt
Read this article in
QR Code to Subscription page
Start your subscription today