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Two Years After Collapse of Communism, East Europeans Still Struggle With Poverty


EARLY in 1992, Czechoslovakia will be able to market its shoes more freely in the West. Poland will be able to do the same with its sausage, and Hungary with its wines.For these countries, associate membership in the European Community is a small but crucial step into the EC and its common market. The accords just signed in Brussels allow them bigger export quotas at reduced tariffs. Mainly these apply to industrial goods and possibilities for loans and technical assistance. They still do not open a Western door to what Eastern Europe does best - agriculture. Such products remain excluded by protectionist EC farm policies. But the accords amount to a solitary bright spot in what will certainly be a tough winter throughout the former communist domain. A study of recent prices, wages, and unemployment suggests that as many as a quarter of Eastern Europeans will continue to live at, or below, acute poverty levels for the foreseeable future. With the final collapse of the Soviet Union, the ratio may become even worse. Average wage and pension growth since reforms began compensate for less than half of the markup in prices. Reforms have put food and goods in shops in even the poorest countries, but at prices too high for most people. Only Hungary has made headway under the rigors of an almost "model" reform program free from political infighting. This is not surprising since Hungary made the first effective moves to dismantle the Communist centralized economic system in 1967. It built an impressive portfolio of joint ventures with Western industrial nations. Since 1989, its performance has again outstripped the other former Soviet-bloc countries. It holds the lion's share of foreign investment in Eastern Europe, and its hard-currency exports surged in 1990 and again this year. Yet Hungarians share in the hard times with inflation rising, living standards still declining, and unemployment higher than anywhere in the former East bloc except Poland. Even Poland has had to slow down privatization - the showpiece of its "shock" reform strategy - because "the human costs are too high," conceded Janusz Lewandowski, Poland's minister responsible for economic reform. Overall, Eastern Europe's revolution enters its third year in unabated economic crisis. Two new phenomena increasingly threaten. The first is an alarming growth in the nationalism and ethnic hates indigenous to most parts of the area. These rivalries exploit poor economic conditions. The second is a clear shift in public thinking: An attitude that "it-wasn't-so-bad-before" is increasingly evident among the fast-growing numbers of jobless people. Even in Hungary, the most optimistic assessment is that a sustained economic upturn is unlikely before 1994. Harvard University economist Jeffrey Sachs, author of Poland's reform package, describes the economic crisis in the former Soviet Union as "the worst in modern times." Jacques Attali, director of the New European Bank of Reconstruction and Development, writes that all of Eastern Europe is in the same dangerous state as Yugoslavia and the former Soviet Union. Both men see radical Western help as both essential to the countries themselves and of paramount American and European interest as well. They are talking, one may assume, of assistance on a much more urgent and substantial scale than the crumbs just promised the Czechoslovaks, Poles, and Hungarians from the EC table.

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