Share this story
Close X
Switch to Desktop Site

Helping Europe Mesh

IN the ``Kreis'' or county of Herzogtum Lauenburg in northern West Germany last month, officials received a two-day visit from their counterparts in the neighboring county in East Germany. They talked about cooperation once the two Germanies are reunified. One West German civil servant even talked of spending funds on civic projects across the border. Such cooperation on a much larger scale is going to be needed if the integration of East Europe into the Western economy is going to proceed at all smoothly. The East European countries expect to achieve more productive and prosperous economies through a greater reliance on markets and private property.

But the transition period could see high unemployment as state enterprises fail or shrink. It is in the West's interest that any economic turmoil in the East be kept to the minimum necessary to hasten a more efficient system.

About these ads

One way the West can help is to do more business in a fair manner with East European enterprises. Many East Europeans are afraid that Western entrepreneurs will exploit them. It is extremely difficult to value a state-owned enterprise. Proper accountants are scarce in the East. Some sharpies in the West may hope to pick up some such companies at extreme bargains. There already have been some scandals connected with the sale or attempted sale of Hungarian enterprises to foreigners.

Or managers may act with unnecessary harshness in introducing new efficiencies into East European firms, adding to the political touchiness of foreign ownership. This could give capitalism a bad name in countries where worker paternalism and full employment have been the key benefits of the communist system.

``East European governments and populations should not have to feel that simply in order to join the world economy they have to put their entire economies up for sale at a chaotic and frequently irrational rummage sale,'' notes economist Josef Brada.

The West should also assist East European nations to continue trading among themselves and with the Soviets through a payments union like that employed in Western Europe after World War II, when hard currency was in short supply.

Last month, 42 nations agreed to form a new multilateral bank to finance the transition in Eastern Europe. This $8 billion European Bank for Reconstruction and Development is to be officially launched May 30. Western commercial banks will be lending more money in the East. But it is to be hoped that they exercise more discretion than they did in making loans in the 1970s to Latin American nations.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.