Restive Poland Looks for Its Place in Europe and NATO : Government: Warsaw hopes to join the West and still maintain ties with former Soviet Bloc allies. But more economic and political change must come first.

Five years after the fall of communism, Poland seems adrift, unsure where it fits into an evolving Europe or how to make its restive people happy.

It wants to join the European Union and NATO, but more economic and political change must come first. It wants to stay friendly with its former Warsaw Pact allies and serve as a bridge to the West, but some Russian officials prefer that their buffer with NATO be more neutral.

On the surface, Poland is doing well. Europe’s fastest-growing economy expanded by more than 4% last year and the Finance Ministry predicts that rate will continue for five years.

Shops that once offered scant supplies of poor-quality goods are filled with Levis, Sony TVs and IBM computers. Retail sales jumped by 48% last year. McDonald’s, Pizza Hut and other fast-food outlets do a brisk business.

But while some people are getting rich from the new capitalism, most are closer to the average monthly wage of $200 and find the plentiful luxuries beyond their means. The growing gap between rich and poor seems to be generating animosity.

“Poland is trying to reform its economy, but the process is difficult and the path from communism to capitalism is long,” President Lech Walesa said. “Western countries were constructing their capitalist systems for 200 years. We have to do this and adjust ourselves within a decade.”

Prime Minister Waldemar Pawlak said that “changing the social consciousness has proved to be the most difficult and time-consuming problem.”

Poland’s 40 million citizens have learned the hard way that democracy and capitalism carry responsibility, the risk of failure and a much smaller social safety net than communism provided.

A recent government report said 42.5% of Poles are living below the poverty line (45% of national average pay), more than double the 20.5% in 1989.

So displeased are the people about not benefiting more quickly from the painful economic reforms that one opinion poll indicated one-third would willingly return to communism. Only one in 10 of those questioned felt his family’s standard of living had improved.

To counter the complaints, officials cite the shortages and limits on individual freedoms that characterized the old system.

“Poland today is better than the one before ’89 despite the problems and frustrations of many people, who truly have reasons to be frustrated,” said Aleksander Kwasniewski, a former Communist sports minister and probable candidate in next year’s presidential elections.

Kwasniewski leads one of the two parties in the governing coalition formed after the parliamentary elections of September, 1993. In a backlash against reform, voters flocked to political groups that grew out of the old Communist Party.

Poland wants to join NATO as a safeguard against possible upheaval in the former Soviet Union, but needs time and help to bring its military equipment and training up to the alliance’s standards.

Tadeusz Iwinski, a member of the Foreign Affairs Commission in Parliament, said Poland “is still looking for its place in the international arena: It is no longer a country with limited sovereignty, but it is neither a NATO member nor a neutral country.”

Poland could play a pivotal role in the region. Washington has designated it as one of the 10 “big emerging markets” because of its capacity for growth and leadership, and President Clinton is scheduled to visit in mid-July.

“With national security and economic security increasingly intertwined, Poland is important both as a potential market for American goods and as a stable, growing economy in what is still a precarious region,” U.S. Commerce Secretary Ronald H. Brown said last month.

Private enterprise has boomed, and now accounts for about 60% of the gross domestic product.

Poland has an association agreement with the European Union and has applied for full membership, but that is unlikely before 2000 and will be followed by a 10-year adjustment period.

Foreign Minister Andrzej Olechowski believes agricultural policy will be the most difficult problem. Poland’s farmers, a powerful lobby, are notoriously inefficient. About 8 million tons of potatoes rot each year, and too many are of low quality.

Unemployment is running about 16%, or 3 million people. Although inflation has declined dramatically, it jumped 5% in the first three months of 1994 and is forecast to total 23% for the year.

An estimated 1.5 million families do not have homes of their own and the building industry produced only 88,000 new apartments last year. Outdated factories and cars belch pollution. Coal still provides nearly two-thirds of the power. The road, telecommunications and utility systems are in poor condition.

Organized crime and tax evasion are increasing. The corruption that became entrenched under communism has been hard to root out.

With other former Soviet bloc countries suffering their own economic problems, Poland has been forced to seek new markets and foreign capital to help modernize its industry.

Jozef Biskup, co-author of a report based on a survey of 570 foreign investors, said they like Poland because of its rapid economic development, the size of its market and the cheap labor. It also provides access to a free-trade zone being established by Poland, Hungary, Slovakia and the Czech Republic.

But Biskup said investors are put off by the red tape, lack of good managers and unstable tax system.

Political stability also has become a question. Acrimony within government has increased, particularly between Walesa and the governing coalition.

Five years ago, the confrontational Walesa was the country’s most popular person as head of Solidarity, Eastern Europe’s first free-trade union and the main force in bringing down communism.

With just a year of his presidency left, however, he found himself fifth in a recent poll of potential candidates. Kwasniewski was No. 1.

In September, Solidarity’s political movement did not even get the 5% of the vote required for inclusion in Parliament.

Still, despite all the problems, officials say Poland’s general course needs only minor corrections.

“No rational political group can think about changing things now,” Kwasniewski said. “We have a good climate. We don’t know how long it will last. This kind of chance may not come again.”