Bush Unveils Economic Aid Plan for Poland

President Bush, declaring that “Eastern Europe is awakening to the yearnings for democracy, independence and prosperity,” unveiled a program Monday that is intended to provide Poland with a modest package of trade and economic benefits in response to the political and economic liberalization occurring there.

The measures include duty-free treatment of Poland’s exports to the United States, American support for the country’s efforts to reduce the cost of paying its $39-billion foreign debt and official encouragement for U.S. firms to consider stepping up their investment in Poland’s ailing economy.

Liberty’s ‘Time Has Come’

The move came a few hours after a Polish court gave official, legal status to the independent Solidarity trade union--a key step stemming from the agreement reached April 5 by the union and the Polish government (Story on Page 13). Bush declared in his speech in the midst of one of the largest Polish-American communities in the United States: “Liberty is an idea whose time has come in Eastern Europe and make no mistake about it.

“The Poles are now taking steps that deserve our active support,” he said, recognizing the Communist government’s decision to permit the first free elections in Poland since World War II.

Solidarity leader Lech Walesa, arriving in Warsaw by train Monday night, praised Bush’s announcement, describing the President as a “brilliant politician.” Looking relaxed despite having a cold, he said, “Bush is a great man and he knows the Polish situation very well.”

Walesa called the proposal for U.S. aid “quite big.”

Neither the government nor Solidarity itself issued any comment, with spokesmen for both sides saying they preferred to withhold comment until they had read Bush’s speech.

In his announcement, however, Bush did declare that the U.S. moves so far are largely symbolic, part of a carrot-and-stick approach that is not without its demands on Poland.

“We’re not going to offer unsound credits. We’re not going to offer aid without requiring sound economic practices in return. And we must remember that Poland still is a member of the Warsaw Pact. I will take no steps that compromise the security of the West,” he said.

“While we want relations to improve, there are certain acts we will not condone or accept--behavior that can shift relations in the wrong direction: human rights abuses, technology theft and hostile intelligence or foreign policy actions against us,” the President said. It was a sharp warning not just to Poland, but to the other members of the Soviet-led Warsaw Pact military alliance, that contrasted with the tenor of the rest of the address.

Speaking to a crowd gathered outside the red brick city hall on a cloudy, cool lunch hour in this aging suburb of Detroit, Bush said that with congressional approval, he would offer Poland access to the Generalized System of Preferences, a series of trade concessions traditionally offered to developing countries that allows the recipients to send their exports here duty-free.

Imports From Poland

According to the White House, the United States imported $417 million worth of Polish goods last year, including fish, textiles, steel and ham. The United States sold $304 billion in goods to Poland, including grains and fertilizer.

The President also said that he would:

-- Work with other major Western nations to reschedule Poland’s debt, “easing a heavy burden so that a free market can grow.”

-- Seek congressional approval for the Overseas Private Investment Corp., a quasi-official government agency that helps finance U.S. investment abroad, to handle transactions affecting Poland. The corporation would offer a form of risk insurance for private American firms investing there.

-- Propose negotiations to ease the way for private American companies to cooperate with private businesses in Poland.

-- Encourage “private business and private nonprofit groups to develop innovative programs to swap Polish debt for equity in Polish enterprises.”

Under such a plan, Polish authorities would offer to buy up parts of the country’s foreign debt at a discount and offer banks or other creditors a share in Polish manufacturing plants and other enterprises in exchange.

Way Is Cleared

In addition, Bush said that the United States would consider support for loans to Poland’s private sector by the International Finance Corp., an arm of the World Bank that specializes in promoting foreign investment in poor countries. He also said that the way had been cleared by the agreement between Solidarity and the government for Poland to seek advice from the International Monetary Fund to develop programs designed to support “sound, new, market-oriented economic policies.”

As he sought to reward Poland for the agreement reached with Solidarity, Bush also encouraged similar change in the Soviet Union.

“We see ‘new thinking’ in some aspects of Soviet foreign policy,” he said. “We are hopeful that these stirrings presage meaningful, lasting and far more reaching change.”

He continued:

“Let no one doubt the sincerity of the American people and their government in our desire to see reform succeed inside the Soviet Union. We welcome the changes that have taken place, and we will encourage, continue to encourage greater recognition of human rights, market incentives and elections.”

Reinstatement of Workers

The measures announced by Bush on Monday reflect the Administration’s strong support for the April 5 agreement in Poland. That agreement provides for the legalization of Solidarity and Farmer’s Solidarity, a rural union, and the reinstatement of workers fired for union activities; election in June of a newly organized Sejm, or Parliament, with 35% of the seats freely contested, and a new, freely contested Senate; and creation of the office of president, whose occupant would be chosen by the legislature.

In addition, the agreement emphasized the need to move toward a market-oriented economy and allows the opposition to establish a daily national newspaper and to gain access to state television and radio.

Deputy White House Press Secretary Roman Popadiuk said that the Administration’s new approach to Poland was drawn from the continuing review of East-West relations that Bush ordered when he took office three months ago.

The United States’ relations with Poland have been steadily improving, since reaching a low point when the Polish government imposed martial law in December, 1981, in an effort to stamp out the Solidarity movement. The sanctions on U.S.-Polish trade that were imposed at that time already have been lifted.

Along with Hungary, Poland is being eyed by White House advisers as a site for a presidential visit this summer, although no plans have been set.

After the speech, Bush joined a group of local residents for a lunch of dill pickle soup, veal cutlet, stuffed cabbage, kielbasa and dumplings, and potato blintzes with onion and dill, at the Pod Orlem (Under the Eagle) Restaurant.