A New World for East European Filmmakers : Movies: Directors adjust to freedoms at home and the prospect of competing in the international marketplace.

“Suffering is more cinematic than happiness,” says Polish director Krzysztof Kieslowski on a subject that East European filmmakers perhaps know better than anyone else. But now with the end of 45 years of communist domination, filmmaking, like every other aspect of life in East Europe, is adjusting to the new demands of freedom. The oppression may be over, but the cinematic future of the region is far from settled. Even how to refer to the directors--European or East European--is a matter of debate as more than 20 directors arrive in Los Angeles to participate in the AFI L.A. FilmFest that is featuring 40 films from Eastern Europe.

Their conversation is rich in metaphor, perhaps as a result of evading censorship for so many years, as they consider the paradox of their freedom. “Now that we have the liberty to make films, we don’t have the money,” said Lyudmil Staikov, director of the epic “Time of Violence” and president of the Bulgarian film industry.

Round-faced and earnest, Staikov is “proud that some of the films made by our industry were the basis for social change.” But, surprisingly, it is not politics that he or his colleagues want to talk about. “I feel for the first time I don’t have to be political. My films can be more personal and more commercial,” said Gyula Gazdag, the young Hungarian director of “Stand Off” who is now a visiting professor at UCLA.

How to find the money to make those films is now the main topic of conversation. Overnight, the East Europeans must compete on the world market with French, German and other international filmmakers. Against the worldwide dominance of hard currency, the film industries of Poland, Czechoslovakia, Hungary, Bulgaria and even the Soviet Union must reinvent themselves from scratch while coming up with a formula to attract an audience at home and abroad.

“What kind of films should we make and for whom?” asked Kieslowski. And in Poland as everywhere, “the audience is always right and the author always wrong. Who has more freedom, someone subsidized by the audience or by the state?”

After a limited diet of approved films, East European audiences are hungry for big American movies, not art. To survive, directors will have to find a way to meet commercial demands without sacrificing the originality of their vision, a dilemma seemingly faced by filmmakers everywhere.

Irina Aktascheva, Bulgarian co-director of “Monday Morning,” hears rallies in the streets and wonders how she can capture that audience for her films. “Right now, people don’t have enough to eat. If we can’t raise the money internally, we have to find sponsorship abroad, and that’s doubtful. I’m sure there won’t be money for films for the next five years in Bulgaria.”

But the need for hard currency is real. Even in the Soviet Union, quality film stock and equipment from the West can only be acquired with hard currency and without it, production values are not high enough to sell a film on the international market. The obvious solution is co-production.

But is there a place for the often dark vision of unknown East European directors in an American-driven market where foreign hits are becoming as rare as $2 bills? “No one is interested in Poland or Polish history,” said Kieslowski, “and an American audience is completely not interested. They see it all on the news.”

Gazdag disagreed. He believes that Americans are curious about Eastern Europe and considers Hungary’s 900-year history of enslavement fertile ground. “The stories we’ve lived through are so interesting and unusual and so much more dramatic than what Americans are used to.”

Whether these stories can be told in English for an international audience without watering down the vision that makes them special was a hotly debated topic at a panel discussion Sunday. The brightly dressed Soviet filmmaker and poet Yevgeny Yevtushenko was against it, urging his fellow filmmakers to “save the flame of real art and inspiration. . . . We must continue to feel pain, but pain of great quality.”

Staikov took a more down-to-earth approach. Sounding remarkably like any producer anxious to make a deal, he promised a Bulgarian industry that would be more responsive to commercial considerations and international taste. “The important thing is to have conditions to work in. We won’t lose our identity by working abroad,” he said, pointing to the work of Forman, Skolimowski, Polanski and Tarkovsky.

The most recent sign of the international appeal of East European cinema is a commitment by Kieslowski to do his next four films for French producers, possibly shot in English, for a world market.

But most co-production is still on the level of foreign companies using the facilities, locations and some below-the-line talent to shoot a project that has nothing to do with the local culture.

Staikov acknowledges that the effect of outside location shooting in Bulgaria could be a “tragedy,” but he promises not to let his country be overrun by future co-productions. “We don’t want to make a lot of money. Just enough to keep our industry afloat.”