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Poland's Economic Future Brightens Despite Massive Woes : Government: New authorities may finally have the backing to tackle strikes, deficits and splinter politics.

August 08, 1992|JOEL HAVEMANN | TIMES STAFF WRITER

WARSAW — Workers at one of Poland's two auto plants are striking for a 150% pay raise. The government budget deficit has spiraled to double the relative size of the massive U.S. deficit. Members of as many as 20 parties are clawing for power in Parliament.

Yet for all that, things have rarely looked so bright here since Poland led Eastern Europe's revolt against communism in 1989.

Labor strife, budget deficits, divided government: "This is normal and inevitable in a country that is coming out of decades under communism," said Adam Michnik, editor of one of Poland's leading newspapers and a leading dissident during the 1980s.

What is abnormal, said Michnik, is the sense that Poland's new government, already its fourth in the post-Communist era, may at last have the wide support necessary to begin tackling the country's massive problems.

Parliament's selection last month of Hanna Suchocka, a relatively unknown figure in the centrist Democratic Union party, as prime minister broadcast the message that Poland is finally getting serious about its experiment with democracy and free markets.

Suchocka had an easy act to follow. The previous government of Prime Minister Jan Olszewski had polarized the nation by delivering to Parliament what purported to be a list of Poles who had collaborated with the Communist secret police. Detracting from the list's--and Olszewski's--credibility were the names of President Lech Walesa, founder of the Solidarity union, and the Speaker of the lower house of Parliament, another former dissident, whose face bears the scars of his punishment at the hands of the Communists.

"There was a feeling that suddenly the republic was in danger," said a Western diplomat in Warsaw. "The government was willing to blackmail its political opponents to stay in power."

The tactic failed. Parliament dumped Olszewski in June and, after Walesa's first choice to replace him failed to put together a Cabinet acceptable to Parliament, Suchocka succeeded a month later.

Suchocka (pronounced su-HOTE-ska) quickly got down to business. She disavowed the finger-pointing politics of her predecessor and shied away from such divisive issues as abortion. Instead, concentrating on building democracy and free markets, she promptly proposed a sweeping plan for overhauling obsolete government-owned heavy industries.

So far, being a woman in a man's world has worked to Suchocka's advantage. Call it sexism or call it Old World courtliness; either way, her opponents have refrained from slinging any Polish political mud in her direction.

Stefan Bratkowski, a former dissident who now runs his own publishing house in Warsaw, hopes Suchocka's government will prove a "turning point" in Polish politics.

"She is a woman of common sense, and she is smart," Bratkowski said. "Something in the air is changing."

Bratkowski conceded that there are dangers ahead. Parliament's 460 deputies are split among about 20 parties--the number keeps changing as new splinter parties form. To win majority approval for her government, Suchocka had to include some of her political opponents in her Cabinet. They could turn on her at any time.

And the economic problems Suchocka faces are staggering. Three previous governments failed to transform the state-owned heavy industries, whose output has plunged 40% since 1989, into productive, privately owned enterprises. Even Poland's reliable agricultural sector, which remained largely in private hands throughout the Communist years, faces declining output this year because of a summer drought.

Plummeting output has cut deeply into tax revenues and sent the budget deficit spinning out of control. The deficit in the second half of this year could exceed 10% of Poland's total economic output, about double the relative size of the U.S. deficit.

Failure to rein in the deficit could cost the support of the International Monetary Fund for Poland's economic program. That in turn could damage Poland's efforts to persuade foreign governments to write off billions of dollars that Poland owes them. It could also lead the World Bank to withdraw support for its development assistance to Poland.

But for all that, there are some bright spots in Poland's future.

Industrial output hit rock bottom last fall and has begun to edge upward since then. Inflation, which soared to annual rates of more than 1,000% when the government abolished price controls two years ago, is down to 40% or so, although the ballooning budget deficit could spell more inflation down the road. Exports are up and imports are down, and Poland is running a healthy trade surplus.

Private enterprises, particularly wholesale and retail operations, are mushrooming; new shops in Warsaw and other big cities sell everything from sophisticated (and usually imported) electronics to fancy clothes. The private sector accounts for about 25% of Poland's non-agricultural economic output, up from just 5% in 1989.

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