Cheers for Bush May Quickly Fade in Poland, Hungary

When President Bush visits Poland and Hungary next week, U.S. officials expect him to step into a warm and welcoming flood of pro-American sentiment. Despite 40 years of Communist rule, Poles and Hungarians long have yearned to be part of the West, and they have traditionally greeted U.S. officials with adulation.

But when Bush begins to speak, the cheers may quickly fade.

“The Poles and the Hungarians are looking for aid, but we just don’t have the money,” said an Administration official who helped plan the trip. “That’s the policy problem: Events have gone way beyond our resources.”

Some U.S. intelligence analysts have warned that Bush’s message of democracy could have explosive consequences--”a kind of spontaneous combustion,” said one, “like (Soviet President Mikhail S.) Gorbachev in Beijing,” at the height of the now-suppressed student protest movement for democracy.

But more likely, most officials said, is a dispiriting letdown once the Poles and Hungarians see how modest U.S. aid for their countries is likely to be.

‘Risk of Disappointment’

“There is a real risk of disappointment in this trip,” one said. “Expectations are high in both countries--unrealistically high.”

Both Poland and Hungary have embarked on a daring and surprisingly rapid course of political reform, far outstripping anything seen before in the Communist world.

In Warsaw, the East Bloc’s first free elections in 40 years have produced a Parliament in which the Solidarity opposition movement--illegal until only three months ago--has a key voice. In Budapest, the Communist Party itself has become an engine of reform, promising free elections and tearing down the border fences with Austria that once marked the Iron Curtain.

But both countries desperately need Western aid to help lift their economies out of a decade of decline. Reformists warn that without such help, their efforts to move toward democracy may be doomed.

“If we can’t get an economic program that works, the people will turn against any government, Communist or Solidarity,” a Polish official predicted. “The credibility of the political reforms is at stake.”

Bush and his aides recognize the importance of the moment.

“We want to help these countries toward an alternative future, a democratic alternative, and to help create a Europe that is whole and free,” Bush told reporters Thursday. “. . . Our challenge is to help create the condition under which the Poles, and the Hungarians can recover economically and make a successful transition towards democracy.”

A major part of that challenge, some U.S. officials say, will be finding ways to help Poland and Hungary without spending much money. The federal budget deficit has ruled out any significant increase in conventional forms of foreign aid.

Package of Programs

Instead, officials said, Bush plans to announce a package of imaginative but low-cost programs to help Poland and Hungary move their economies toward capitalism, plus a commitment to push for a joint Western approach to relieve the two countries’ foreign debt burden.

Among the initiatives, according to U.S. and Hungarian officials, is a plan to send Peace Corps volunteers to Hungary to train English teachers there. The volunteers would be the first Peace Corps workers in any communist country; a plan to send volunteers to China was derailed by the political crackdown last month.

Bush will announce an expansion of U.S. exchange programs with Poland and Hungary, focusing not on traditional cultural and educational visits but on teams of American entrepreneurs, managers, labor leaders and political professionals who can help the Eastern Europeans build the institutions of democracy and free enterprise.

“In a sense, it’s taking the President’s idea of a thousand points of light and extending it to Eastern Europe,” a senior official said, using Bush’s favorite phrase for volunteer action.

And Bush will reaffirm the package of economic measures for Poland that he unveiled in April, including eliminating tariffs on some Polish exports and placing U.S. private investments under the protection of the Overseas Private Investment Corp., a government insurance program. Some of those measures also apply to Hungary.

The President had asked Congress to act on that plan in time for his trip, but Sen. Jesse Helms (R-N.C.) blocked the measures in the Senate Foreign Relations Committee, arguing that Hungary’s Communist rulers had done little to merit U.S. indulgence. “An embarrassment,” a State Department official said of Helms’ action.

Bush and his aides argue that any larger program of aid, presumably aimed at reducing the two countries’ foreign debt, would be misplaced.

“Whatever is done . . . we want to do it in a way that would not repeat the mistakes of the 1970s, where we tended to make available a lot of credits and concessionary lending and subsidized lending that did not carry with it the appropriate reforms of those economies,” Secretary of State James A. Baker III told reporters last month. “They are now saddled with a lot of debt as a consequence of that, and it really didn’t help them move toward a free-market economic system.”

As for the debt problem, Bush plans to promise the Poles and Hungarians that he will press for more liberal terms of payment when he meets with their other Western creditors next week at the annual economic summit of leading industrial nations in Paris.

Hungary’s foreign debt of $18 billion is the largest per capita debt of any country in Europe. Poland owes even more money; Warsaw has defaulted on payments on its $39-billion debt.

The United States has been pressing its partners in the Paris Club, the major creditor governments, to extend more liberal rescheduling terms to Poland. Officials said they hope the economic summit would produce a joint agreement on the issue.

But Bush’s readiness to help on that score falls far short of what the Poles have been asking. Solidarity leader Lech Walesa has circulated a proposal asking $10 billion in new loans and grants from the West over the next three years--a figure that Baker politely called “probably not feasible.”

In fact, Bush will be exhorting Poland’s workers to tighten their belts still further, at least in the short run. Any Western plan for debt relief will be linked to the progress of economic reforms, which well may create both unemployment and higher prices for previously subsidized goods. And when Bush meets with Walesa on Tuesday, he intends to ask for restraint on the labor movement’s wage demands--and the opposition’s political demands as well.

Paradoxically, the allure of reform has made the stability of the Soviet Bloc one of the main tenets of U.S. policy toward the area. The Soviet Union will tolerate political and economic changes in its satellites, the thinking goes, only as long as its military security is not endangered. “We aren’t calling for anyone to leave the Warsaw Pact at all,” said one official. “That would be really stupid.”

The United States no longer calls for a “rollback” of Soviet rule in Eastern Europe, as it did in the 1950s; instead, Bush hopes that the current process of gradual reform will slowly erode the structure of Soviet domination. In a sense, the Administration is taking the same tack as Gorbachev: supporting political and economic reforms without getting too specific about where they will lead.