Economy on Mend, Polish Aide Asserts

Poland’s battered economy is turning around, Warsaw’s chief economic planner said last week during a visit here in which he sought to boost Warsaw’s chances of obtaining new international credits and even to acquire U.S. airliners.

Deputy Premier Zdislaw Sadowsky said Poland’s exports have risen nearly 30% this year as the government has loosened the reins on state-owned enterprises and encouraged private ventures, while liberalizing the political system.

In an interview during his five-day stay, Sadowsky made it clear that the regime is in the process of scrapping the old centrally planned Marxist system, although not without pain, particularly for workers caught between low wages and newly freed prices.

After meetings with Vice President George Bush, Treasury Secretary James A. Baker III and other Administration officials as well as congressmen and international bankers, the 63-year-old economist said he found sympathetic listeners for his message.

Sadowsky said he was seeking investment rather than loans from the United States under pending legislation that will open Poland to foreign businessmen and scrap a provision requiring Polish majority control. Sadowsky also said that he hopes that the International Monetary Fund and World Bank will be able to provide financial support.

“Even without outside help, we can pay our debt service by 1991,” he said. “With help, we can do it sooner.”

Poland’s foreign debt, the result of a disastrous expansion a decade ago, now totals $39 billion, and interest cost is running $3 billion a year, only $2 billion of which is being paid by the government, with the other $1 billion being added to the total debt. Sadowsky said he hopes that refinancing from international institutions can halt that accumulation.

“The money we are now paying is equal to one-quarter of our hard currency export earnings, so there is no way we can increase payments without increasing exports,” Sadowsky said.

He acknowledged that Warsaw’s action in raising internal prices to their real levels has brought enormous strain, most recently a 60% jump in fuel prices, which had been kept artificially low under the old system. This and earlier increases triggered a “very strong demand” for wage boosts. The result was spring strikes in the national steel industry and the Gdansk shipyard where the now outlawed Solidarity independent trade union was born in 1980.

“The steel strike suspended production, although only 5% of the workers were involved,” Sadowsky said of the Nowa Huta plant near Krakow, where police used massive force to smash a sit-in last May. “We could not give in.”

A U.S. official, commenting on condition that he not be identified by name, said of Sadowsky’s visit: “We view his optimism with some healthy skepticism, but we also see him as a serious man seriously interested in reform. He’s been the architect of the effort to move away from a centralized economy and there has been some good news, but we don’t think we have reached the point where it can be said that he has succeeded.”

Sadowsky said one of his aims here was to speed the purchase of three Boeing 767s for Poland’s national airline, LOT. He said he is eager to upgrade the airline’s service, because LOT is a dollar earner, aiding in the promotion of tourism.

He said that purchase arrangements are nearly concluded, but he declined to give details.