Europe's `Cow War' Shows Persistence Of Cold-War Divides

THE Czechs and other East Europeans have begun to talk unhappily of a new "Iron Curtain" dividing West and East - this time against trade.

In a move that sparked a "cows' war," the European Community banned bovine products from all the 18 countries of Eastern Europe and the former Soviet Union, after an outbreak of hoof and mouth disease in Italy was linked to a live cattle shipment from the former Yugoslavia.

Four countries - Poland, the Czech Republic, Hungary, and Bulgaria - reacted to the EC move by banning the Community's own meat exports. Eastern European officials say EC markets remain almost as closed to them now as during their former communist regimes.

The dispute shows the difficulties the former communist states face in their efforts to establish a new economic system and integrate into Europe. Ironically, the difficulties seem to threaten most those who have achieved most in economic reform so far.

After two wasted years of political delay, Poland had begun to look good. It had finally satisfied the International Monetary Fund's tough budget criteria, and last month the IMF released a long-awaited $655 million credit deal. But now Warsaw officials may be forced by parliamentary opposition pressures to water down their industrial privatization program. Dilution could jeopardize the whole reform process.

Six months ago, reform in the former Czechoslovakia was flourishing. But the country's Jan. 1 breakup now spells almost as much trouble for the industrially advanced Czech Republic as for economically weaker Slovakia.

Hungary is still the strongest magnet for foreign investment, but lately has shown signs of wilting under the pressures of inflation, joblessness, and an indecisive government.

Meanwhile, disparities in the potential for economic growth, as well as in the will to reform, are reminiscent of the North-South divide of the communist years. Under communist rule, the former East Germany, Poland, and Czechoslovakia - each with developed industries - constituted a relatively efficient "iron triangle."

Reunification removed east Germany from that old scenario. In this new age of general reform, Poland and Czechoslovakia are again front-runners with Hungary in coming to grips with a new economic system. Romania and Bulgaria lag behind.

But across Eastern and Central Europe, citizens are losing patience and equating reform with declining living standards.

In this situation, nationalists and communists tend to gain popular support and unite to obstruct reform for their own political ends, as found most recently in Poland, whose uneasy seven-party coalition and a messy, fragmented parliament have become susceptible to anti-reform pressure. It is an alarming dilemma: The longer it takes for living standards to pick up, and for unemployment and inflation rates to be reduced, the greater the political appeal of a more authoritarian system.

Eastern governments see the West - still deep in recession - offering lukewarm support. The East Europeans all want full membership in the EC. But they all lack money and have large farming populations tied to agriculture as a prime export source. East Europeans do not meet the EC's Common Agricultural Policy, and would require massive help to do so.

There is growing Eastern criticism of Western "protectionism" in imposing strict quotas on exports - including steel - of what East Europeans might sell best in the West.

Many Western observers sympathize with the general East European view. "It's not much good offering aid with one hand and blocking trade with the other," one businessman notes.

Whether Western markets are opened more generously - even to beef - seems destined to be the final arbiter of the fate of East European reform in this year of trials.

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