Wintry outlook for Polish economy

Press, 10 November 1981, Page 24

Wintry outlook for Polish economy

By

Janusz Obodowski, Poland’s deputy Prime Minister and economic overlord, reaches into this jacket pocket to pull out a bulging wallet. “See this,” he says, “I have a whole wallet full of zlotys here — and nothing I can buy with it.

“That’s the reason for our economic crisis,” he adds, "and why our living standards are so low.”

A big man with the build and face of a boxer, Mr Obodowski, 51, is in charge of the Government’s anti-crisis team. He is a leading candidate for Premier, to replace General Jaruzelski, who has become Party leader. For the moment, however, Mr Obodowski’s job is to ensure that Poland survives the coming winter. It is a daunting task. Outside his well-ap-pointed suite of offices in Government headquarters in Warsaw, the effects of Poland’s economic crsis are plainly vis-

MICHAEL DOBBS,

in “The Guardian,” London.

ible. There are queues everywhere: for meat, for cigarettes, for detergent, for children’s clothes, the queues for petrol are so long — up to 400 cars — that they almost touch each other. The best illustration of what the zloty is actually worth is provided by the black market Officially, one United States dollar equals 33.50 zlotys. On the street however, a dollar trades for 370 zlotys and the price is going up every week.

The phrase “economic collapse” is overworked, but it is fast becoming a reality for Poland, a country that used to boast of being the world’s tenth industrial power.

Of course, modem nations do not go bankrupt Because of the complex inter-relationship in the world economy, it is always in somebody’s interests to prop them up. Governments and private banks have been

from Warsaw,

forced to help Poland, if only to safeguard their earlier investments here.

On paper, however, Poland went bankrupt long ago. Its debts — about $27 billion to Western creditors alone — far exceed its ability to pay them off. Had just one of the 480 banks to whom Poland owes money insisted on prompt repayment, a general default would have been declared and Polish assets around the world seized.

Poland is becoming increasingly reliant on its Soviet bloc neighbours. The total value of Soviet assistance to Poland during the past two years has exceeded $5 billion. This includes low-interest loans and supplies of oil and other raw materials uncovered by Polish exports.

It is against this background of mounting foreign debts and the growing worthlessness of

its currency that Poland’s struggle between the Communist authorities and Solidarity is taking place. Both sides seem to recognise that the old economic system has irretrievably broken down. But there is sharp disagreement on what should be put in its place. For Mr Obodowski, the top priority is to halt the slide. He compares Poland’s economic plight to the action of a corkscrew, twisting downward in ever-tighter circles. “I want to get this corkscrew moving up, but first of all I have to stop it going down,” he says. The most obvious example is coal production, down 25 per cent this year. Less coal means less exports, which means less hard currency and less imports. That in turn means fewer raw materials and less food for, among other people, the miners.

Mr Obodowski says production of winter vegetables will fall drastically this season because farmers lack the coal to heat their greenhouses. To save energy, he has ordered a halt in coal deliveries to cement

plants and electricity cuts for domestic and industrial users. Municipal heating will also be reduced.

For the time being Polish families are attempting to protect themselves as best they can by hoarding food and using their surplus zlotys to buy anything on the market. The Polish press recently reported the case of a teacher whose apartment was found to contain a store of 259 cans of meat, 307 jars of jam, 273 packets of soup, 123 packets of tea, 110 pounds of sugar, 65 pounds of flour, 214 bars of soap, 64 rolls of toilet paper, and 64 pounds of salt. The teacher said he had been storing the goods “for hard times.” This was an extreme case. But visitors to ordinary Polish households are frequently surprised by larders packed full of rationed goods such as flour and sugar. Sometimes it all goes mouldy and has to be thrown away. Solidarity officials recognise the need for emergency measures to see Poland

through the winter. But thev also argue that the crisis will not be solved by attempting to prop up the present ramshackle economic system. Instead, they say, it is necessary to destroy the system entirely and begin again on a more sensible basis. In the view of Solidarity strategists, the only hope for Poland lies in radical economic reform, freeing the individual factory from State control by transferring power to workers’ councils, who would then make their own pricing and investment decisions. The extent of self-management in industry is now one of the major issues between Solidarity and the Government. As the debate continues and winter closes in, the Polish economy is gradually collapsing. If left to themselves now, many Polish factories would go bankrupt. Or, as one economist put it: “There is a very real danger that we may spend so much time talking about reform that by the time we get around to it there will be nothing left to reform.”