Modesty Is Becoming in Bush’s Aid Package : Incentive-Based Help to Poland, Hungary Strengthens Them Against ‘Gang of Four’

President Bush will receive a hero’s welcome this week in Warsaw and Budapest.

This is so partly because Eastern Europe, ironically, is the most pro-American region in the world and partly because so many Poles and Hungarians expect American help to realize their historic change from dictatorship to democracy. (The Solidarity trade union, for example, has lobbied for an aid package with a bottom line of about $10 billion.)

Our experience with aiding Poland in the 1970s has convinced the Bush Administration not to offer substantial new credits to either Poland or Hungary. The President is not going empty-handed, but he is not offering a new Marshall Plan for Eastern Europe either. Because the Polish regime of the 1970s wasted so much of our money to postpone the introduction of painful economic changes, this time we will not offer direct financial support.

What the President will offer will be a program of incentives rather than outright grants or credits. In particular, he will make it easier for American companies to invest in Poland and Hungary by insuring their investments against political, though not economic, risks. He will also seek to assist the privatization of the two economies by both foreign and local investors.

At a White House symposium last week, the President made it clear that Washington is placing Eastern Europe, especially Poland and Hungary, considerably higher on its foreign-policy agenda.

The reason is obvious. For more than four decades, the United States has fought wars and spent billions of dollars to contain communism. Now there is a chance to help Poland and Hungary move away from one-party rule toward an open society. The cost is relatively low, the potential gain for democracy is high.

Of the two countries, Hungary is economically better positioned to make the transition. Since the introduction of economic reforms in 1968, that country has freed the price of most food items and has even begun to close unprofitable firms. Politically, both freedom of assembly and freedom of the press are all but complete, although the possibility of reversals cannot be ruled out.

In Poland, political changes have been institutionalized. Not only is Solidarity free to organize workers, but its representatives now dominate the upper house of the Polish parliament. They can effectively veto any decision made by the lower house, which is still controlled by communist or pro-communist legislators. In the economic realm, however, Poland remains a basket case. Free elections have not yet produced a government that is willing to move toward a free market and accept its consequences. A large part of the Polish state budget is still spent on subsidizing inefficient and unprofitable factories.

President Bush’s modest package contains a powerful message to the Poles and the Hungarians: The more you help yourselves, the more you can count on us. His policy also contains a critical message to the Soviet Union: Washington is deeply interested in enhancing the prospects for democracy in Poland and Hungary, but it is not interested in challenging legitimate Soviet security interests in Eastern Europe. In particular, we are not interested in trying to break up the Warsaw Pact.

It is a measure of changing times that the greatest resistance to democratic transformation in Eastern Europe no longer comes from the Soviet Union. It comes instead from Poland’s and Hungary’s neighbors, the region’s “Gang of Four”--Stalinist Romania and Brezhnevite East Germany, Czechoslovakia and Bulgaria. The old leaders of these countries have taken it upon themselves to criticize the new trends in Poland and Hungary--and by implication in the Soviet Union as well. In recent weeks, they have publicly attacked Poland and Hungary for their “anti-socialist” policies.

In addition, the Communist parties of Poland and Hungary are also divided. How else could it be? Hundreds of thousands of political careers are at stake. What will those bureaucrats do whose knowledge does not extend beyond Marxism-Leninism? What will they do in a free society?

Four decades of mismanagement will not go away in a month or a year. But Americans who are impatient or skeptical should recall that our democracy took many decades to evolve; we didn’t even have a Constitution for many years. What matters, therefore, is that a historic process has begun in Eastern Europe that may lead to a Europe without walls--or, indeed, without a curtain.