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Foreign Debt, Lack of Aid Hinder East Europe's Progress

BETWEEN them, the East European countries' foreign debts add up to at least $80 to $85 billion. Poland owes almost half of this total, Yugoslavia nearly $20 billion, Hungary and Bulgaria at least $10 billion apiece, and Czechoslovakia $6 billion.

Romania has no debt. Repayment was Nicolae Ceausescu's solitary service to his unfortunate country, although at immense human cost.

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The other five countries are falling deeper in the red, unable to repay on time Western government or bank creditors the principal and meet interest payments.

Western rescheduling and ``writing off'' of some of the debt can only delay the ultimate reckoning. Meanwhile, East Europeans must live very close to economic collapse - unless there is a radical change in Western thinking on aid.

Not long ago, Poland, Czechoslovakia, and Hungary appeared headed toward effective reform. Romania, Bulgaria, and Yugoslavia were too troubled by political and ethnic conflict to find a direction. But now, even the front-runners share the latter's uncertainty and confusion.

In Poland, a populist presidential election unseated a government that made a promising start toward stabilization and a market-oriented economy.

Czechoslovakia got into a constitutional bind with Czechs and Slovaks that threatened to split the federation.

Hungary's much-acclaimed center-right coalition faces acute social unrest.

In Bulgaria, such unrest has just brought down an elected government. The same seems likely in Romania.

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In Yugoslavia, election victory for an orthodox and extreme nationalistic Serbian Communist Party at odds with the nation's liberalized republics makes federal survival still more doubtful.

Such confusion in the region can only fuel the uncertainty that the West feels about how far financially to back the switch to capitalist economies.

Support thus far is small and tentative, with minor trade concessions and the provision of business know-how. Only Germany and France favor rapid, comprehensive help as a mark of confidence, which they say will encourage boldness in reform.

New uncertainties will prompt others to continue to ``wait and see.'' Western banks will be even more wary of putting new money after old. Governments will prefer to go on thinking long-term, with debt repayment, for example, stretched far into the next century.

Not surprisingly, East Europeans ask: ``How can we rebuild our industries with new technologies without your immediate help to acquire them?'' As an economist told this writer, ``We just haven't got that kind of time.''

Poland is an immediate example. It has made radical changes, but only on a scale a visiting American expert called ``petty capitalism.'' A full market system remains far off, and the likely social dislocations are only beginning.

A kind of second Marshall Plan, as some in the West earlier suggested, cannot be the answer. That was devised for a prostrate postwar Europe, not for a complex change of system.

Western criteria are largely ``to help those who help themselves.'' No Marshall Plan, therefore. But maybe another example from the past is applicable.

In the early 1950s, the United States, Britain, and France proceeded from initial emergency food aid to Yugoslavia to financing of a full-blown economic development program.

Tripartite aid began with some ``open checks,'' which often were misapplied. Then a canny British civil servant urged that aid be absolutely conditional on it being used on priorities selected by the three donor nations.

Agriculture - converting backward farming (just like Poland's today) to modern technology - was a top priority. It worked extraordinarily well.

Why not apply similarly conditional aid criteria both to industry and agriculture in Eastern Europe? It would meet doubts about the wisdom of aid. It might even encourage the politically timid reformers to get on with it faster, as the West requires.

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