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INEFFICIENCY POISONS POLAND’S ECONOMY

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Yellow smoke churns upward from the coking-plant furnaces at the giant Nova Huta steelworks here, poisoning every living thing in every direction - killing the fir forests, stunting the livestock, giving asthma and chronic bronchitis to 60 percent of the city's children.

Krakow's Vistula River is so polluted that its water can't even be used for industrial purposes; it corrodes pipe."Putting that steel mill here was a punishment by the Communists," says Boguslav Krasnovolski, who is trying to preserve and restore this ancient cultural capital of Poland. "It was a deliberate act directed against our national culture. Krakow voted against the Communists three times in 1946, so they decided to build a mill here to attract a working class and to make the city communist."

Now the Communists are gone, but Nova Huta remains, a Stalinist relic and symbol of the economic gridlock that paralyzes Poland.

This is the gridlock: The Nova Huta mill - and smaller but equally poisonous counterparts in Katowice and Bytom, to the West - are the foundation of Poland's economy. In Krakow, a city of 700,000, Nova Huta accounts, directly or indirectly, for 100,000 jobs.

The new, Solidarity-backed Polish government wants to make major economic changes - like shutting down polluting, inefficient steel mills even if that means putting its own supporters out of work. Employees at Nova Huta are the high-paid princes of Polish labor, earning $100 a month. They didn't throw the Communists out of office so that they too would be unemployed.

Today, Lech Walesa, the Solidarity leader who regards himself as the spiritual liberator of all Eastern Europe, finds himself once again in opposition, this time to the policies of the government he once backed. He has ousted the Communists, but now he is fuming against the realities of modern economics.

"He is talking about strikes and another revolution," said Artur Musial of the Polish information center here. "He is really shaking the confidence of the Western investors."

Without Western investment, Poland has no hope. And even with Western investment, it doesn't have a lot of hope. Poland has to be rebuilt from the bottom up. It needs a new telephone system. It needs a banking system. It needs a change in the widespread peasant attitude that making money without doing heavy lifting is somehow sinful.

"The banking system is even worse than the telephones," complains entrepreneur Andrzej Kita, an electronics-plant owner who is one of Poland's richest men. "It is easier for me to put $50,000 cash in a suitcase and fly to Sweden to pay a supplier than it is to write a check on a Polish bank. And it is nearly impossible to get a Polish bank to invest in private enterprise. Capitalists still have a negative connotation here."

In fact, the Communists are gone only as a political force. At Nova Huta, their mentality lingers, in both management and labor.

"No country is capable of economic development without heavy industry," says Ryszard Kaczor, chief engineer at Nova Huta. Steel will continue to be made at Nova Huta; it's not the world's best steel, of course, but it's cheap, and Kaczor has a monopoly on producing sheet steel for the Polish motor-vehicle industry. All he needs is some foreign investment for new technology, including some pollution controls. When asked whether the end of Communist control had changed the way he does business, Kaczor promptly replied, "Not really."

Ironically, Wladyslaw Kielian, vice chairman of the Solidarity committee at Nova Huta, favors far more radical change than Kaczor - even though change threatens his workers most.

"We're transforming the economy into a free market," Kielian said in an office the mill now provides him. "So far that has meant higher prices and a lower standard of living. It's very hard for the average worker - especially the steel workers - to accept. The first thing we have to do is take care of the environment. We have to get rid of the coking plant. But we are opposed to massive layoffs."

To Kielian, Kaczor represents "the old way of thinking. That's why we need new management. Solidarity has been legalized for a year now, and it seems to me that we have not been successful in making any real changes."

Also lingering on at Nova Huta is a rival to Solidarity. It is the successor to the old, officially sanctioned community trade union, which now calls itself the Independent Bloc of the Democratic Left. Chairman Wladyslaw Sitkowski wants economic improvements - but no foreign ownership, no big layoffs and no decline in the status of the workers.

"No! It's not acceptable," Sitkowski exploded when faced with the suggestion that a free market might create a new class of businessmen who would earn even more than steel workers. "We cannot accept that the workers become impoverished and the businessmen live well. People work hard in a place like this. Steel workers must be the richest; they should be rewarded for a lifetime of hard work."

"The only solution I've heard," a longtime American resident jokes bitterly, "is to take Nova Huta and turn it into a kind of Stalinist Disneyland. The smokestacks would belch away, you'd have actors playing happy workers. You could put all those old Lenin statues there."

To Hungarian economist Ivan Berend, Poland's dilemma is "completely hopeless - well, almost hopeless. East Germany, Hungary and Czechoslovakia will make it. But Poland is and will be hopeless."

Berend frets over the economic shock therapy that, theoretically, made the Polish zloty freely convertible into dollars. The switch produced an instant abundance of goods in Polish stores - but at world prices. Polish salaries, however, average one tenth the salaries earned in the West.

"A very symbolic thing happened just the other day," Berend noted. "Western countries lifted visa requirements for Hungarians, Czechs and Slovaks - but not for Poles. There are 38 million Poles, and given the economic problems they face, millions would leave if they could."

Next: Finally, freedom.

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