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Eastern Europe: Financing From Within
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17046 |
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Section : |
CURRENT ISSUES
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8 / 1990 |
2,502 Words |
| Author
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Ivan Pongracic
A native of Yugoslavia, Ivan Pongracic is assistant professor
of economics at Indiana Wesleyan University. |
Just before 1989 ended, Poland signed a $710 million economic agreement with the IMF, opening the door for more billions in Western funds for itself and the other restructuring economics of Eastern Europe. Under the pretext that, as the U.S. Agency for International Development recently stated,” an infusion of capital is needed to help the [restructuring countries] weather the storm as the system adapts to the new realities,” new financial agencies and development banks are mushrooming all over the West, often trying to outdo each other in generosity and goodwill.
Under the dubious assumption that socialism's days are numbered, the cry to funnel Western money eastward is getting louder with every new day, both in the East and the West. The latter (where too many businesses see this as an excellent opportunity to get rid of mounting surpluses) is obligingly responding with a new strategy to rescue inefficient socialism.
New strategy? Well, it is new if one conveniently forgets the 1970s. During that time, Poland, Yugoslavia, Hungary, and Romania (yes, Nicolae Ceausescu's Romania) received, in total, more than $100 billion. The reason for this outpouring of goodwill (beyond the glut to petrodollars in Western banks) was a vague promise that these countries were on the way toward reforming their inefficient, centrally planned economies. Although for some time reform was discussed excitedly among Western intellectuals, especially the Yugoslav experiment in self-management and Hungary's goulash communism, the tinkering with market socialism soon ended in fiasco. Most of the 1980s had to be spent re-centralizing the decision-making process in those countries. (At the end of last year, according to the Wall Street Journal, seven East and
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