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Western Assistance and Eastern Reform
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16618 |
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Section : |
SPECIAL SECTION
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| Issue
Date : |
11 / 1989 |
4,141 Words |
| Author
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Jan Zielonka
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The Paris Summit of the Group of Seven industrialized European countries in July concluded that the West should provide Poland and Hungary with the financial assistance necessary to sustain the momentum of their economic and political changes that are now underway. This assistance should be directed through inward investment, joint ventures, transfer of managerial skills, professional training, and other ventures that would contribute to the development of a more competitive economy in those countries. It is also anticipated that there will be a big push to reschedule the payment of Poland's, and eventually Hungary's, external debts. Also, Western leaders have at last decided to coordinate their actions and have chosen the Commission of the European Community to handle this task. The International Monetary Fund (IMF) and the World Bank will also have an important function in the effort to stabilize staggering East European economies.
However, the level of assistance offered so far is very modest and falls short of Eastern European expectations. At the same time, the idea of funding changes in the East evoked rather mixed public reactions, with many observers expressing skepticism about the utility and wisdom of such an endeavor. The skeptics remind us that during the 1970s, Western aid to Eastern Europe produced enormous debts rather than economic transformation. They point to the uncertain future of the reformist experiment in Eastern Europe and observe that most changes undertaken so far have a basically political character and have not led to substantial economic improvements; the Polish Solidarity movement, in particular, is suspected of being an irresponsible trade union movement that believes that hard economic choices can be avoided by simply throwing money at the problems. Both Hungarian and Polish reformers are being asked to manifest their ability to overcome the economic crisis, to honor their enormous debts, and to restructure their economies on the liberal market mode before any significant Western assistance can be expected.
The above arguments seem sensible, but to a great extent they are misleading. The basic problem is that they ignore the real causes of the current economic troubles of Hungary and Poland. The skeptics do not comprehend the essence of the new Western policy nor do they understand how it differs from the policy of the 1970s.
The old and the new strategy
The central causes of the weakness of the Hungarian and Polish economies are their isolation from the world markets during the past several decades and their allegiance to a bureaucratic system of central planning. Their enormous debt probably would not have accumulated if there had not been an oversupply of petrodollars on the market in the early 1970s, or if the West asked for changes in the economic and political structures of the communist system as a prerequisite for borrowing money. Unfortunately, no such requirement was attached to Western aid, and the nomenklatura was more than happy to use petrodollars to bolster its sagging popularity.
Today, on the contrary, the proposed assistance is based on principles that give little comfort to the communist old guard. The Western aid is designed to help overcome an unprecedented economic crisis by sponsoring market-oriented reforms and democracy in Eastern European countries. No one who is working for reform in Poland and Hungary would suggest pouring in more aid to
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