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The Bush Agenda in Eastern Europe

THE President of the United States has an opportunity to influence the course of history next month when he visits Poland and Hungary. He can lead the West in understanding and responding to what will be exceedingly difficult transitions to democracy. The democratization process in these Warsaw Pact nations is unlike those recently experienced in non-communist countries where market economies were already in place. The evolution toward democracy is unfolding differently in Poland and Hungary, but in both partial gains already achieved on the political front have produced high expectations, but harsh economic realities remain.

After a decade of confrontation with Solidarity, the Polish government agreed in March to a major reform of the political and governmental system. The Communist Party, however, had no idea how much it really gave up until the results of the June 4 elections became known. The party retained the authority to govern, barely, but was denied any mandate to do so. Future policy decisions in Poland will necessarily be the result of collaboration. Under the current agreement the soon-to-be-elected president has the power to veto legislation. But this power is checked by the new 100-seat Senate, fully controlled by Solidarity. The result will be either power-sharing or stalemate.

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The process seems less confrontational in Hungary, where some economic liberalization within the centrally planned system had occurred. The Communist Party, under the pressure of rising expectations, has initiated political reforms and begun negotiations with the opposition on a new political and electoral system.

In both countries there is an overriding need to develop an economic strategy to deal with high external debts and to begin economic restructuring. In Hungary, the International Monetary Fund (IMF) has already pressed for austerity measures in exchange for a degree of relief on the country's $16 billion external debt. Poland's $39 billion external debt is lower on a per capita basis than Hungary's, but no less debilitating.

The West should be able to pull together a package to provide relief, but great political sensitivity is required. The typically draconian austerity prescriptions of the IMF will evoke a strong reaction from already hard-pressed populations. The restructuring necessary to make these economies dynamic will shake the foundation of the entrenched social welfare and patronage system put in place by the communists.

The reform wings of the communist parties in these countries are eager to share responsibility for economic reform. But they also hope to retain power long enough to transform themselves into competitive socialist parties.

The democratic progress already achieved can easily be reversed. Institutions, governmental and civic, are weak or nonexistent. In the absence of organized advocacy groups, people experiencing new freedom are more likely to take to the streets to express their discontent. Hard-line elements will characterize this as chaos and call for reactionary steps.

What, then, can President Bush and the others in the West do to prevent a premature end to this democratic spring?

This is not a time for hesitant half-measures. We have an opportunity to change the face of Europe and to serve our own interests by further reducing the threat inherent in an anti-democratic ideology. The West must help these countries through the throes of economic restructuring. Working people must be assured a social safety net will remain in place during the change-over.

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Privatization of state-owned industries is needed, but this cannot occur without capital. Investment is already being encouraged by changes in local laws, but foreign companies will require some additional insurance against risk. Job retraining programs will be essential but they, too, cost money.

The US should lead the way in creating an international consortium capable of funding these reforms. Western Europe and Japan should be asked to join this effort to make available adequate assistance carefully tied to democratization criteria and the dislocations likely to be caused by liberalization.

Economic assistance alone will not bring these countries through the transition. What they need most are the essence of stable democracies - competitive political parties, free labor unions, an independent judicial system, market-oriented economists, risk-taking entrepreneurs, a vibrant free press, and civic associations. The most fundamental principles of a market economy - the laws of supply and demand, collective bargaining, and consumerism - need to be taught and applied. This is most likely to come from nongovernmental sources, but must be supported by Western governments.

We hope the President will recognize these needs and lead the West in an imaginative and creative effort.

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