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The Ultimate Panacea? For East Europe It's Brussels : Europe: The troubled Eastern Bloc countries look to the European Community and 1992 to rebuild their economies and bolster their democracies.

September 16, 1990|Walter Russell Mead | Walter Russell Mead, author of "Mortal Splendor: The American Empire in Transition" (Houghton Mifflin), has been traveling in Europe since April

BRUSSELS — Will Europe manage it this time? Will World War II and the Cold War finally lead to a Europe at peace with itself and the world? The new Europe has a new flag, and it is everywhere in Brussels: 12 yellow stars on a field of deep blue on public buildings, on license plates, on T shirts. The bustling office buildings of this ancient city are filled with a new breed of Eurocrats: officials putting together one after another of the directives that, by the end of 1992, are expected to make one common market out of the European Community's 12 member nations.

Brussels hasn't always been this peaceful. Three centuries ago the armies of Louis XIV blasted much of the city into rubble. Only 50 years ago Adolf Hitler's Panzers smashed across the Belgian frontier, knocking out the defenses within hours and beginning five years of occupation that older Belgians still remember with bitterness.

That Germany, 50 years after the blitz, is on the march is only one of Europe's fears and perhaps not the most alarming. Europe is trying to believe that the Germans learned something in the 20th Century: to remain firmly committed to the prosperous paths of peace rather than the costly and destructive process of nationalist self assertion. That the EC exists at all today is a tribute to the new German leaders who emerged after the war. Germany has long been the most loyal and generous member of the European Community and its representatives today are busy assuring its neighbors that, in Chancellor Helmut Kohl's words, the new superstate wants "a European Germany, not a German Europe."

But Germany is the center of Europe, not its frontier, and from the lands beyond come warnings of new storms ahead. Travelers returning from the East, including officials of various Western governments as well as prominent private citizens with great experience in Eastern Europe, speak of disintegration, chaos and possibly war. The old institutions and authorities of the East have broken down, but it is not clear whether they will be replaced by anything better in the long run. The economic problems of the East, according to these observers, are far deeper and more critical than the West yet understands. Some expect to see real hunger in Poland, possibly next winter; experienced observers not given to hyperbole speak openly of civil war in Yugoslavia breaking out.

The full extent of Eastern Europe's problems are only beginning to appear. In the first flush of revolutionary enthusiasm, these nations hoped that the consequences of throwing off the communist yoke would be rapid economic improvements and generous Western aid. Now disillusionment is setting in on both fronts. The formerly communist societies of the East are not ready for market economies. Reports from Western intelligence and financial institutions speak of three to five years of recession and worse in the reforming economies, followed by upturns in the mid-'90s.

Problems are serious and structural, and unlikely to fade away. Transportation is a shambles; communication a disaster. Some Eastern countries are virtually cut off from the outside with only a handful of phone lines. Factories have outdated equipment and cannot be managed profitably in a capitalist economy.

The market successes in Eastern Europe have been small scale: Poland is one vast flea market but bazaars don't make countries rich. If they did, Istanbul would be the financial center of the world.

The rapidity with which farmers, restaurateurs and others have moved to take advantage of new openings testifies to the entrepreneurial spirit of Eastern Europe. But there is a long way between a flea market and a modern competitive industrial and electronic economy. Almost nobody in the East knows how to project a cash flow or depreciate an asset. No one knows how to market a brand, float a stock issue or set a price in a competitive environment.

The aid from the West is falling short of expectations, and the Eastern countries are proving unable to use much of what is offered. Perhaps misled by Western anti-communist rhetoric, Eastern Europeans believed the proclamations from places like Brussels and Washington about undying solidarity with those trapped behind the Iron Curtain. It turns out solidarity came more from the heart than the pocketbook. Increasing frustration characterizes the dealings of East Europeans with their Western counterparts as request after request for assistance goes unanswered.

Meanwhile Western donors are almost equally frustrated. The East is so disorganized, its economy so chaotic and the pool of trained managers able to function in a capitalist setting so small, that private and public aid agencies are often unable to find viable projects to fund.

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