Democracy at Its New Frontier Does Not Come Cheap : Poland: The West must demonstrate its solidarity with an urgent infusion of cash. That will help Poles summon the courage to take the bitter medicine of economic reform.

The “new frontier” for American foreign policy lies now to the east, in Poland, Hungary and the Soviet Union. The same dynamic and challenging leadership evoked by President John F. Kennedy’s phrase is desperately needed if transitions to democracy in these countries are to succeed. Yet, in the case of Poland, this leadership is sorely lacking.

We recently attended a conference in Poland focusing on the role of the new Parliament in developing economic policy. Many of the newly elected Polish legislators were underground or in prison a year ago. Now, with virtually no training or experience, they are trying to build a democratic institution that will inspire the people’s confidence and trust.

Eighty percent of the Polish people support the new Solidarity government, according to a recent survey. That popular support will be vital as the government attempts simultaneously to implement political reforms, negotiate the rescheduling of a $41-billion external debt and completely restructure the economic system, from central planning to free market.

The magnitude of the challenge would make any politician cringe. Hyper-inflation, which could reach 4,000% by the end of the year, would be debilitating enough. A proposal to index wage increases to the inflation rate would exacerbate this problem.

Massive subsidies supporting food, transport and energy production keep prices unrealistically low, despite the inflation. Patronage and featherbedding keep employment unrealistically high. Endemic corruption and a vast nomenklatura network of Communist Party cronies sap the system of any remaining capacity.

The political message that Solidarity must present to Poland is as counter-intuitive as any ever delivered: “Trust us. We will raise the prices of your commodities so we can give you a free market. We will increase unemployment so that our industry can be more profitable. We will end the crony system and eliminate 800,000 additional nomenklatura jobs.”

The only saving grace is an argument used frequently by Solidarity in recent days that goes something like this: “It took 50 years for Hitler, Stalin and the United Worker’s Party to ruin the Polish economy. It will take us a few years to make it right.” That might buy some time.

Unwilling to commit any significant resources, President Bush has assumed the role of the cautious banker. Efforts are under way to reschedule a good portion of Poland’s debt, and the Administration is urging that this happen even before an IMF agreement expected by the end of year. According to the plan, World Bank loans could then follow. The European Community, with some American prodding, has announced a $356-million relief package, and food aid was increased by the United States and the EEC. All of this may help get Poland to the starting line, but it will do little to instill the confidence and political will necessary to administer the very bitter medicine of economic reform.

The Administration’s wait-and-see approach might have been appropriate a few months ago when it looked as though Poland would still have a communist government. Now it could become a negative, self-fulfilling prophecy.

The West needs to show its commitment, not with nickels and dimes, but with resources and leadership equal to the historic breakthrough Poland represents. A $1-billion stabilization loan is urgently required to help curb the rapid inflation. A multinational consortium should provide at least $10 billion for commodity credits, investment capital, retraining programs and assistance for those losing their jobs. If subsidies, now constituting 40% of Poland’s GNP, are to be phased down and eliminated, supplies of commodities must be adequate to keep demand and prices in check. These are essential antidotes for a nation that, to use the parlance of the drug war, has been hooked on subsidies, patronage and corrupt practices.

Poland’s new political leaders have demonstrated courage and imagination in overcoming 40 years of totalitarianism. The United States and the Western world should marshal comparably bold leadership to do what is so clearly in the interest of us all. A free, stable Poland could save us billions because of the diminished threat it would constitute on the part of the East.

Forty years ago we offered to include Poland in the Marshall Plan, but Stalin would not permit it. We should renew the offer, for this time it would be accepted by all sides as a down payment on peace and democracy.