Tough Winter Looms For New Democracies
A LONG, hot, and politically difficult summer is over. East Europeans must brace for perhaps a cold, but certainly a tough, economic winter. Through summer, their new governments' struggles to launch a new economic system were slowed by frequent political and ethnic conflict as opposition and minority groups took to the new democracy.
But such local considerations paled in significance as the Gulf crisis hit the economies of smaller nations supporting United Nations sanctions against Iraq. None more so than those of Eastern Europe.
This was a crisis on top of a crisis, threatening the sector where it most hurt - energy. For them, the Gulf could not have erupted at a worse time.
For more than three decades, Eastern Europe had no such problems.
Political deference to the Kremlin was rewarded with oil, gas, cotton, and other raw materials - at below world prices.
But the scene was already changing before the Gulf crisis. After launching his 1986 call for economic restructuring at home, Soviet leader Mikhail Gorbachev looked at the Soviet Union's own trade relations at large.
And Moscow's allies soon got notice that, from that point on, trade would be on a strictly market footing.
Through the fall of 1989 and the following winter, Eastern Europe was liberated.
The compulsive economic dependence on the Soviet Union ended. At the same time, the Soviet economy dramatically worsened.
Today, the Warsaw Pact, although meaningless, vaguely lingers on.
But Comecon, through which the Soviet Union operated its complex barter operations, including the cheap oil from which Eastern Europe undoubtedly benefited, is as dead as the dodo.
Now, not only were profit criteria and world prices to prevail, future trade was to be subject to hard-currency accounting. To make matters worse, it became clear the Soviet Union was not going to have enough oil to export - except at world prices. Its oil fields had shown signs of decline since the early 1980s.
Not until this year, however, did the magnitude of the Soviet economic crisis generally and the output losses in key sectors like oil stand fully revealed.
A 1987 peak in oil - with an export margin large enough to keep the East Europeans happy - could not be sustained. Wells were increasingly idled by strikes and lack of repair parts. Ethnic unrest in Azerbaijan, bringing Baku, the main equipment producing center, to a virtual standstill, further accelerated decline.
Inevitably there will be less and less oil for the East Europeans as Moscow goes for the higher world prices set off by the Gulf. But each dollar rise in prices will also add millions to their bills.
For some years, the East Europeans had cast around the Middle East and the Gulf for alternative suppliers. Unfortunately, most of what was achieved was with Iraq - oil in exchange for industrial construction.
Iraq's reneging on massive debts has cost Poland most of the oil due this year in repayment. So also, it seems likely, the 2 million tons expected in 1991. Romania estimates its overall losses at nearly $3 billion.
All have sought help from the European Commission, the United States, and the World Bank. Czechoslovakia told the United Nations sanctions committee that it faces $2 billion in losses and also asked the European Community to institute ``special measures'' to help out.
Thus far, however, international ``understanding'' has yet to produce the program necessary to help these new Europeans through the cash and oil crisis of a hard winter.