EDITORIAL: Economics and Poland (12/27/81)

EDITORIAL

Economics and Poland

Reports riltering out of strife-torn Poland indicate a nation on the brink of total social and economic collapse. When Gen. Wojciech Jaruzelski declared martial law on December 13, he hoped that the show of muscle would simply intimidate the populace, round up politically suspicious intellectuals and labor leaders, break up any strikes quickly and stabilize the situation within days. The gambit failed. At last report, resistance to the emergency measures remains fairly widespread. A letter from Poland recently received in Sweden describes a pitched battle with police in Gdansk involving nearly 40,000 people.

It is apparent that Gen. Jaruzelski overestimated the effectiveness of naked force, and underestimated the resoluteness of the Polish people. In the face of truncheons, riot shields, tanks and noxious gas, workers and their supporters reportedly defended themselves with umbrellas, rocks and handbags. Strikes are continuing in the coal mines in Tychy, the oil refinery in Gdansk and other areas throughout the country. An already hobbled economy has ground to a halt.

Clearly, the longer the situation remains destabilized, the greater the likelihood of direct Soviet intervention. For one thing, the chaos in Poland has already cost the Soviets dearly. The Kremlin has already primed Poland's decaying economy to the tune of $5 billion since the Gdansk agreement was hammered out in August 1980. Next to East Germany, Poland had been the USSR's leading economic partner, with trade reaching $11.4 billion last year. With the economies of all Comecon countries sputtering badly, the Soviets must dig deeper into their own coffers, which themselves are badly depleted due to a sluggish Soviet economy.

To further squeeze the Polish junta (and the Soviets), President Ronald Reagan announced during what was to have been his Christmas address on December 23 that economic ties with Poland would be sharply curtailed. He indicated that the U.S. government was halting the renewal of Poland's line of export credit insurance through the American government backed Export-Import Bank. The export insurance is worth about $25 million to Poland yearly. In addition, the president announced the suspension of Polish fishing rights in American waters. In 1981, Poland took in about 230,000 tons of fish off U.S. shores, a third of its worldwide haul.

The day before the president's address, Western banks decided to reject Poland's request for a new $350 million loan to enable it to pay the interests outstanding on its debts at the end of this year. A failure by Poland to pay the interest would further damage the East Bloc's credit standing in Western markets, presumably adding to the Soviet Union's burden in keeping its allies afloat.

Will these economic measures, which would have a significant impact on the Polish economy and, by extension, the Soviet economy as well, tempt the Soviets into crossing the frontier in a desperate attempt to stabilize the situation? We think not. They have too much to lose. President Reagan's speech made it clear that such a move would have dire consequences, both political and economic. There has already been talk on Capitol Hill about reinstating the grain embargo, limiting trade with the Soviets, or barring the sale of much-needed high technology. Such moves would clearly hurt the Soviets. The much-ballyhooed natural gas pipeline between the USSR and Western Europe, for example, is largely dependent on American technology.

In addition to economic sanctions, the Soviets would risk putting a deep freeze on East-West relations should they march, thereby threatening any hope of arms limitation and shattering the last vestiges of detente.

Do the measures announced by President Reagan have enough clout to pressure the Polish regime into re-evaluating its stance? They might, but a lot depends on the response of the NATO allies and, thus far, their response to the Polish crisis has been wishy-washy. Although the European Common Market delivered a demarche to the Polish foreign minister in Warsaw which waxed "growing concern" about the "grave violation of the human and civil rights of the Polish people," it has yet to put its money where its mouth is.

Moreover, West German Helmut Schmidt, who was in East Germany when martial law was declared in Poland, rather tactlessly suggested that the move was "necessary." Although aides later tried to gloss over the remark, the implication seems clear. West Germany is Poland's largest creditor in the West, and a large proportion of its loans are underwritten by the federal, government. It is disturbing to even consider that West Germany, official outcries of indignation to the contrary aside, may privately believe that a crackdown was necessary in Poland to secure economic stability.

What all this means is that, once again, the United States has made a decisive and unilateral move to try and influence the course of events, and once again the European allies have remained relatively mute. A similar situation arose after the invasion of Afghanistan. The U.S. embargoed the sale of grain to the Soviets. The Europeans expressed prolix indignation, and then proceeded to carry on business with the Soviets more or less as usual.

Given the gravity of the Polish situation, it is clearly time for the West Europeans to put their own short-term economic interests aside and put their own economic clout behind President Reagan. It would be political tomfoolery to once again leave the United States out on a limb holding the bag.

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