Clinton Exhorts Poles to Hew to Free Market’s ‘Proven Path’ : Europe: President lauds citizens’ wartime valor but says they face new challenges.

Appealing to logic and national pride, President Clinton sought Thursday to bolster weary Poles’ faith in the free market’s “proven path to prosperity,” as economics overshadowed security concerns in his second day of meetings with Polish leaders.

Clinton, who later flew to Naples, Italy, for a three-day economic summit that begins today, spoke in an appearance before the Sejm, or lower house of Parliament, of Poles’ valor in fighting Adolf Hitler and in their long struggles against the Soviets.

But he said Poles now face the challenge of economic and democratic reforms, which will not yield the same drama as their war experiences did. “If we meet them well, our reward will not be stunning moments of glory, but gradual and real improvements in people’s lives,” he told the chamber in a 20-minute address that received only mild applause.

The preoccupation of Polish leaders with economic questions was apparent in Clinton’s meeting with Prime Minister Waldemar Pawlak and leaders of the left-wing coalition that dominates the Parliament.

Pawlak “didn’t say a word” about the new North Atlantic Treaty Organization membership plan that has dominated public debate between American and Polish officials in recent months, said a senior Clinton Administration official, who added, “It just didn’t come up.”

Instead, Pawlak and Polish officials focused their discussion on U.S. economic aid, and most particularly on their desire for sharply stepped-up American investment in Poland, officials said. Surprising some analysts, the United States has become the largest single source of foreign investment in Poland, with a total of $1.2 billion, or 44% of the overall sum.

Polish President Lech Walesa underlined the same interest Wednesday when he said that Polish hopes rest “in the American generals--General Motors and General Electric.”

U.S. officials, insisting that neither they nor American taxpayers favor a new “Marshall Plan,” did not leave Warsaw without pledging additional help for the Poles.

They announced outlines of programs they said are worth about $200 million. These efforts aim to increase American investment and offer Poles help in building housing and their banking system; others will assist the Poles in improving their programs to find new jobs for the unemployed and fight the crime that has grown amid Poland’s reforms. There also is a $65-million “Polish Partners Fund,” which will use government seed money and U.S. labor unions’ pension fund assets to create a larger investment pool.

But U.S. officials said one of the greatest changes Poland must undertake is reform of its social welfare system, which is poorly organized to meet its citizens’ needs. In keeping with the Soviet system, government assistance is doled out widely--it goes to 85% or 90% of the population, although perhaps 80% of Poles might not qualify for it if income was the only criterion, officials said.

Although many Poles have expressed grave concern about the troubled economy and the political tumult of the post-Soviet era here, American officials insisted that Pawlak and his allies reaffirmed their intention to stay the course of reform. “They were all voicing a commitment to economic reform of the market,” said one official, adding that all--including former Communists--”sounded like total converts.”

In his speech, Clinton was unstinting in his praise of Poles. He recited their wartime heroics, including the Warsaw uprising against Hitler (“the greatest urban uprising of this century”) and their success in breaking Nazi codes in World War II.

A senior Administration official said such praise was an effective way to appeal to a people who have suffered deeply through the centuries. “What he’s basically doing is something the Poles really appreciate, in that he’s honoring them for their history of being . . . raped, pillaged and plundered,” the official said. “The Poles love to hear the fact that they’re the heroes.”

Clinton included in his speech other language intended to reassure the Poles, who worry about military threats, especially from a resurgent Russia. “No democracy in this area should ever be consigned to a gray area or a buffer zone,” the President said.

Referring to fears that Russia might use its clout in international organizations to affect the course of Western military aid, Clinton said that “no country should have the right to veto, compromise or threaten democratic Poland’s, or any other democracy’s, integration into Western institutions.”

Still, he did not answer a question Polish officials have pressed over and over: When will Poland be allowed full membership in NATO?

Clinton stressed how far the Poles have come toward capitalism and democracy. “Poland faces what may be fairly described as its best prospects for peace and security in 350 years,” he said.

Earlier, Clinton made ceremonial visits, drawing enthusiastic but small crowds. He stopped at the Monument to the Ghetto Uprising, which memorializes the resistance of Jewish fighters in the Warsaw uprising; a monument to children who took part in the uprising, and the Tomb of the Unknown Soldier.